Historical context
South Korea is one of the largest cryptocurrency markets in the world, with a high level of adoption and an active trading community. The government's attitude towards digital assets has gone through several stages:
Early years (2017-2019):
- Initial caution - authorities considered a complete ban on cryptocurrency exchanges
- "Cryptocurrency frenzy" - huge interest among the population led to the so-called "kimchi premium" (higher prices on Korean exchanges)
- Tightening regulation - banning ICOs and introducing a real-name system for cryptocurrency accounts
Modern policy:
Regulation and legalization (2020-2025)
- Special Financial Transactions Act (2020) - officially recognized cryptocurrency exchanges and established requirements for them:
- Mandatory registration with the Financial Services Commission (FSC)
- Compliance with KYC (Know Your Customer) and AML (Anti-Money Laundering) requirements
- Partnership with regulated banks to ensure real-name accounts
Taxation:
- Introduction of a 20% tax on profits from cryptocurrencies over 2.5 million won (~$2000)
- Several delays in implementing the tax due to political debates
Blockchain initiatives:
- Investments in blockchain technologies - the government allocated over $400 million to develop the blockchain ecosystem
- Regulatory sandboxes - creating special zones for testing blockchain projects without strict regulatory restrictions
- Digital Won (CBDC) - active research and development of central bank digital currency
Current trends:
1) Consumer protection:
- Strengthening oversight of cryptocurrency exchanges
- Requirements for transparency and disclosure
- Fighting fraudulent projects and schemes
2) Integration with the traditional financial sector:
- Banks are starting to offer cryptocurrency custody services
- Fintech companies are integrating blockchain solutions
- Institutional investors entering the market
Impact on the global cryptocurrency market
South Korea has a significant influence on the global cryptocurrency market:
- Trading volume - Korean exchanges are among the largest by trading volume
- Technological innovations - active development of blockchain startups
- Regulatory trends - Korean approaches to regulation are often copied by other countries
Possible prospects:
- Further institutionalization - a clearer legal framework for cryptocurrencies is expected
- Development of CBDC - continuation of digital won development
- Balance between innovation and security - seeking a middle ground between supporting technological development and protecting consumers
Conclusion:
South Korea continues to be one of the key players in the global cryptocurrency arena, and its regulatory decisions are closely monitored by other countries seeking to develop their own approaches to regulating digital assets.