#SouthKoreaCryptoPolicy South Korea's crypto policy has undergone significant changes in recent years, reflecting the government's efforts to balance innovation with investor protection. Here are some key developments:

Regulatory Framework

- The Financial Services Commission (FSC) is the primary regulator for virtual asset service providers (VASPs), overseeing compliance with anti-money laundering (AML) and know-your-customer (KYC) requirements.

- The Act on Reporting and Using Specified Financial Transaction Information regulates VASP activities, including reporting suspicious transactions and implementing internal AML policies ¹.

Recent Reforms

- *Lifting of Institutional Investment Ban*: South Korea plans to lift its ban on institutional crypto investment, with a two-phase rollout starting in April. This move aims to integrate institutions into the crypto sector and align with global regulatory trends.

- *Spot Crypto ETFs*: The government is expected to approve spot crypto ETFs, following the US and UK's lead. This would allow investors to gain exposure to cryptocurrencies like Bitcoin and Ethereum through traditional investment vehicles.

- *One-Exchange-One-Bank Rule*: The ruling party plans to scrap this rule, allowing crypto exchanges to partner with multiple banks and promoting fair competition

Crypto-Friendly Policies

- *Lee Jae-myung's Election Promise*: During the recent election, Lee Jae-myung made promises to appeal to the nation's 15 million crypto investors, indicating a potential shift towards more crypto-friendly policies.

- *Banks' Push for Regulatory Overhaul*: South Korean banks are urging the incoming administration to revamp financial regulations, enabling them to participate more directly in the digital asset economy

Investor Protection

- *Protection of Virtual Assets*: Companies are required to manage customers' virtual asset transaction deposits separately from their own assets, keep virtual assets owned by customers separate, and maintain records of transactions for 15 years.

- *Regulation of Unfair Trade Practices*: VASPs