#SouthKoreaCryptoPolicy

1. Virtual Asset User Protection Act (VAUPA)

• Effective July 19, 2024, this served as the first comprehensive crypto framework. It mandates:

• At least 80 % of user funds stored in cold wallets;

• Exchange-held fiat in licensed banks;

• Insurance or reserves to cover hacks or liquidity issues;

• Protections against insider trading, market manipulation, and unfair practices; and

• Regulatory oversight by FSC/FSS, with inspection and penalty powers .

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2. Follow-up Legislation (Phase 2)

• As of January 2025, discussions are underway for a second-phase law to strengthen:

• Exchange and service provider transparency (e.g., listing disclosures akin to traditional finance);

• Stablecoin oversight, covering reserve management and redemption rights;

• Corporate market participation guidelines;

• Higher internal controls, conflict-of-interest rules, and licensing standards   .

The FSC anticipates drafting this second-phase bill by late 2025 .

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3. Institutional & Corporate Access

• The 2017 ban on institutional crypto trading has been dismantled in phases:

• H1 2025: Permits non-profits, universities, and public agencies to trade crypto .

• H2 2025: Allows listed companies and professional investors to participate .