As one of the most active countries in global cryptocurrency trading, South Korea's policies are critically influential on the market. Here is a systematic analysis:
🇰🇷 The main impact of South Korea's cryptocurrency policy on the market
1. Policy tightening → Short-term bearish for prices, but medium to long-term bullish
In recent years, the South Korean government has strengthened regulation of cryptocurrency exchanges, project parties, and assets, such as:
Real-name account system (prohibiting anonymous trading)
Virtual Asset Service Provider (VASP) registration system
Strengthening Anti-Money Laundering (AML) and KYC standards
✅ In the medium to long term, it will create a more compliant and transparent trading environment, aiding institutional entry and capital stability
2. South Korean market has a large trading volume → Policies have spillover effects on global prices
South Korean exchanges (e.g., Upbit, Bithumb) once accounted for over 10-20% of the global trading volume in certain cryptocurrencies
Once policies tighten, it may lead to:
Outflow of local funds
Price discounts appear in South Korea (Korea Discount)
Short-term global market sentiment turns bearish
📉 For example, tightening exchange review policies in 2021 led to a general decline in altcoins
3. Tax policy affects retail participation
South Korea once planned to impose a 20% tax on cryptocurrency gains, but has postponed its implementation multiple times (latest postponed to 2025).
If implemented in the future, it may lead to:
Retail trading willingness decreases
Transfer to unregulated platforms or overseas exchanges
📊 Market activity and trading volume may experience a short-term decline
4. Policy support for blockchain innovation → Beneficial for long-term industry development
The South Korean government is also actively promoting blockchain applications, especially in:
Government affairs system (identity verification, data on-chain)
Investment in NFTs, Metaverse, and ecosystems (e.g., Busan Blockchain City project)
📈 Forming a 'high regulation + high innovation' dual-track policy, steadily attracting capital and projects
✅ In summary:
Although South Korean policies are relatively strict, they help the market's compliance and long-term stability, potentially causing price fluctuations in the short term, but beneficial for capital entry and industry development in the medium to long term.