South Korea may allow institutional investors to trade crypto
South Korea is planning to ease restrictions on corporate crypto trading, with plans to gradually provide real-name accounts to institutional investors, Yonhap News Agency reported.
The country will allow corporations to invest in crypto as the Financial Services Commission is set to lift restrictions, whereby companies will be able to open real-name accounts on crypto exchanges. This would begin with non-profit organisations, which would be allowed to open real-name accounts on crypto exchanges. The ultimate goal is to extend this privilege to institutional investors across various sectors.
What are the current laws?
South Korea’s current crypto laws allow only retail investors with verified real-name accounts to trade. While institutional investors are not officially banned from trading, banks have been advised not to issue them real-name accounts. The FSC aims to bring changes to this, with plans of discussion through the Digital Asset Committee.
The reluctance by banks to issue real-name accounts to corporation stems from concerns about the volatility of cryptocurrencies and the regulatory uncertainties surrounding digital assets. However, this could change with FSC’s proposal as it realises.
Measures will be introduced by the FSC to allow fintech companies to grow. The financial regulator’s main goal is to improve collaboration between financial groups and fintech firms. There will be a push towards improving how crypto exchanges are regulated, especially regarding the listing of tokens and the handling of stablecoins.
The FSC’s proposal is designed to address the increasing demand for crypto trading among corporations while maintaining regulatory oversight. The gradual rollout of real-name accounts is seen as a safer approach to integrating institutions into the market, ensuring the utmost priority remains security and transparency.
Real-name accounts allow for greater transparency, ensuring that transactions are traceable to real-world identities. For corporations, the ability to open real-name accounts would allow them to engage in crypto trading while complying with anti-money laundering (AML) and know-your-customer (KYC) regulations.
Chairman of the South Korea Exchange, Jeong Eun-bo, said earlier in January that the trading platform wants to “explore” crypto spot ETF approval in 2025. This move could provide retail and institutional investors with a new avenue for gaining exposure to cryptocurrencies without directly trading them. This came as reports indicated that the FSC also wants to allow companies to launch security token offerings.
Jeong said during his speech at the Securities and Derivatives Market Opening Ceremony 2025 that the exchange will “benchmark overseas cases for new businesses such as cryptocurrency ETFs and explore new areas in the capital market.”
