Key Notes

Key Notes:

The South Korean government has officially lifted its ban on corporate participation in cryptocurrency trading, marking a major policy shift since its 2017 prohibition.The Financial Services Commission (FSC) announced a phased approach to integrating corporate entities into the crypto market while maintaining financial stability and user protection.The first phase allows government agencies to liquidate confiscated crypto assets, while universities and non-profits will be permitted to convert crypto donations in the second quarter.

The South Korean government has officially concluded its discussions on allowing corporate institutions to participate in the crypto market.

On Thursday, the country’s Financial Services Commission (FSC) announced the results of its month-long consultation, introducing the “Roadmap for Corporate Participation in the Virtual Asset Market”. This initiative aims to gradually integrate corporate entities into the market while ensuring user protection and financial stability.

Since 2017, South Korea has prohibited corporate trading of virtual assets due to concerns over money laundering and financial misconduct. However, with the recent implementation of the Virtual Asset User Protection Act, the government has reconsidered its stance, opening the door for institutional participation.

The FSC also cited the increasing acceptance of institutional players in global markets as a key factor behind its decision. By lifting the ban, South Korea aligns itself with countries like the United States, Hong Kong, and Canada, which have already embraced corporate crypto trading.

South Korea began discussions on allowing corporate institutions to enter the crypto market in December last year. During the last meeting held today, the FSC confirmed that participation will be introduced in phases, starting with permission to sell.

In the first half of 2024, the government will permit the issuance of real-name accounts for selling purposes. During this stage, law enforcement agencies such as the prosecution, National Tax Service, and Korea Customs Service will be able to sell confiscated crypto assets obtained from criminal cases.

By the second quarter, additional organizations, including universities and charitable institutions, will be allowed to liquidate crypto donations into fiat currencies. To facilitate smooth transactions, the government will introduce specific guidelines to help these non-profit organizations manage and convert digital assets efficiently.

“As most non-profit corporations still lack standards and procedures for receiving and converting virtual assets into cash, we plan to support the establishment of minimum internal control standards,” reads the circular.

During this period, crypto exchanges will also be able to convert their transaction fees to cash and be used for general expenses such as personnel expenses and tax payments. However, the FSC will establish a joint “sale guideline” for service providers to prevent conflict of interest due to large-scale sales.

Once the initial phase is complete, the government plans to launch a pilot program in the second half of the year, allowing institutional investors with risk-management capabilities to open real-name trading accounts for investment and financial activities.

The FSC will collaborate with approximately 3,500 registered companies, including listed firms and professional investors governed by the Capital Market Act.

However, financial institutions will not be part of this deal. Authorities highlighted that these selected participants already have experience handling high-risk derivatives, making them suitable for early institutional crypto adoption.

The FSC also said that corporations participating in this phase will be required to comply with new regulatory measures, particularly those governing cross-border transactions. According to the authorities, the Foreign Exchange Transactions Act, which regulates international virtual asset exchanges, will play a crucial role in overseeing corporate crypto investments.

Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.

Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.

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