Author: Zen, PANews
South Korea's cryptocurrency market may usher in a new landscape, with the situation dominated by retail investors and lacking institutional participation seeing a turning point.
On January 14, the Korea Composite Stock Price Index (KOSPI) hit a historic high, breaking through the 4700-point mark for the first time ever. As the Korean stock market welcomed this joyous occasion, significant positive news also quietly emerged in the country's cryptocurrency market.
According to Korean media reports, the Financial Services Commission (FSC) plans to lift the ban on corporate cryptocurrency investment that has been in place since 2017, intending to allow listed companies and professional investors to participate in cryptocurrency trading. In a government-private sector working group meeting on January 6, the FSC shared a draft of the relevant guidelines.
Breaking a Nine-Year Restriction: Korean Listed Companies to Be Allowed to Invest in Cryptocurrency
This new regulation is essentially a continuation and further refinement of the "Virtual Asset Market Promotion Plan" announced by the FSC in February last year. It originally planned to conduct pilot tests in the second half of last year, allowing some institutional investors with risk-bearing capacity to open real-name trading accounts for investment and financial purposes.
The target group approved to participate in the pilot project is about 3,500 listed companies and enterprises registered as professional investors under the "Capital Markets Act," excluding financial institutions. The FSC stated that professional investors registered under the "Capital Markets Act" are already allowed to invest in the riskiest and most volatile derivatives, and these companies have a high demand for blockchain-related business and investment.
According to disclosures by the "Seoul Economic Daily," the FSC plans to allow eligible corporate entities to invest up to 5% of their net assets annually in cryptocurrency. The new regulations also delineate the scope of investible coins. It is limited to purchasing large cryptocurrencies ranked in the top 20 by market capitalization, focusing on mainstream coins with good liquidity and large scale, such as Bitcoin and ETH.
The specific rankings are determined based on the data published every six months by the alliance of the five major domestic cryptocurrency exchanges, DAXA. Regarding whether USD-pegged stablecoins (like USDT) should be included, regulators are still discussing and have not yet given a clear opinion.
Furthermore, in terms of trade execution mechanisms, it requires exchanges to split and execute large cryptocurrency trades in batches and set single-order size limits. This means that large buy and sell orders need to be split by the exchange into smaller orders for gradual execution, and abnormal trading behaviors are monitored to reduce the impact on market prices and prevent manipulation and liquidity risks. This mechanism aims to ensure the market can still operate smoothly after institutional funds enter.
It should be noted that the various provisions in the aforementioned draft regulations are not final. The FSC emphasized in a statement that the guidelines are still in the process of being developed and discussed, and core details such as investment limits and eligible assets have not been finalized. Some sources said the FSC is expected to announce the final guidelines as early as January to February 2026. If the guidelines are successfully implemented, corporate institutional cryptocurrency trading could officially begin before the end of 2026.
Distorted Market Structure Under Restrictive Policies: Retail Frenzy, Institutional Absence
The Korean regulator's relaxation of the ban on corporate cryptocurrency investment this time is a major shift since the implementation of strict regulatory policies in 2017.
In 2017, cryptocurrencies represented by Bitcoin experienced explosive growth in South Korea, the "Kimchi Premium" phenomenon became prominent, retail speculation enthusiasm was high, and chaos such as ICOs arose, alerting regulators. On the other hand, for anti-money laundering and financial crime prevention considerations, Korean authorities were concerned that large amounts of funds might use crypto assets to evade supervision. Therefore, the financial authorities quickly introduced several measures, including prohibiting corporate entities from participating in cryptocurrency trading.
The nine-year corporate ban fundamentally changed the participation structure of South Korea's cryptocurrency market. The market's trading entities were almost entirely filled by retail investors, while large institutions and corporate funds were kept out, leading to relatively limited trading volume and activity in the Korean market. Meanwhile, some institutions and high-net-worth funds seeking to allocate digital assets chose to go overseas to find more relaxed investment channels.
The pattern of a market dominated by retail investors with institutional absence also formed a sharp contrast with the significant institutional proportion in mature markets. Therefore, while the strict ban in 2017 initially effectively curbed the local speculation frenzy, it also, to some extent, caused the Korean market to decouple from the global institutionalization wave.
In fact, Korean regulators have begun to gradually relax crypto restrictions on institutions in recent years. Over the past few years, as crypto assets have gradually matured globally and financial participation has significantly increased, Korean authorities have also begun to realize that sticking to old ways would inevitably mean missing development opportunities. In the "2026 Economic Growth Strategy" published by the Korean government, digital assets were explicitly included in the future financial landscape.
Starting last year, South Korea tentatively relaxed some regulations, such as allowing non-profit organizations and cryptocurrency exchanges to sell their held crypto assets. Until this new guideline drafted by the FSC, regulators have finally given the green light again for corporate cryptocurrency investment, making a major correction to the strict control policy and becoming an important part of South Korea's digital finance strategy.
Heavyweight New Players Enter the Game, Meeting DAT Narrative at a Freezing Point
The Korean cryptocurrency market has always been known for its high speculation and狂热 (狂热 -狂热) retail investors, and the imminent lifting of the ban for thousands of large enterprises and professional institutions, allowing them to enter as heavyweight new players, undoubtedly brings much room for imagination to the industry.
Some Korean media gave an example, saying that Naver, the Korean internet giant that is acquiring the parent company of Korean cryptocurrency exchange Upbit, has book equity of 27 trillion won, and theoretically could buy about 10,000 Bitcoins according to the 5% upper limit. Such a huge amount of institutional funds entering the market will significantly increase the liquidity and depth of the local market. The industry expects that this move will attract Korean capital观望 (观望 - watching and waiting) overseas to return回流 (回流 - flow back) and enter the domestic cryptocurrency market through legal channels, supporting the development of the local trading ecosystem. The potential inflow scale after the lifting of the ban could reach tens of trillions of won (over 100 billion US dollars).
Furthermore, under the past ban, large companies could not get involved in the加密 (加密 - encryption/crypto) field, which to some extent suppressed corporate enthusiasm for exploring blockchain technology and digital assets. After opening up, it is expected that local crypto companies, blockchain startups, and related industries such as digital asset custody and venture capital will receive an indirect boost.
Cointelegraph analysis pointed out that institutional entry will drive the expansion of local Korean crypto companies and startup projects and催生 (催生 - spur the emergence of) corporate-level Digital Asset Treasury (DAT). At the same time, allowing legal coin holding is also expected to promote cross-border blockchain project cooperation, attract overseas crypto institutions to do business in South Korea, and overall enhance South Korea's status as an Asian crypto financial center.
However, whether the DAT strategy will be effective in South Korea also faces multiple tests. On the one hand, policy restrictions make it difficult for the Korean version of "treasury companies" to施展拳脚 (施展拳脚 - fully utilize their skills), and the mere 5% investment cap means the proportion invested in cryptocurrency is relatively low. On the other hand, besides pioneers like Strategy that have been布局 (布局 - laying out plans/positioning) for many years, the vast majority of crypto treasury companies in the market have suffered大量亏损 (大量亏损 - heavy losses) due to the "double decline of coins and stocks," which has caused the DAT narrative to cool down to a freezing point, and global investors have lost interest in it.
More convenient investment channels have also weakened the necessity of the DAT strategy. With the advancement of compliant investment products such as Bitcoin ETFs in major global markets, institutions and investors can directly share Bitcoin's price increase through ETFs. Since there are already simpler and safer investment tools like ETFs, naturally they won't be keen on paying a premium for listed companies' coin-holding behavior. South Korea is also currently promoting spot ETFs based on assets like Bitcoin, which may officially launch as early as the end of this year.
Another factor that cannot be ignored is that according to market observations, the heat of the Korean cryptocurrency market continued to decline in the second half of last year, with a large number of investors turning to the stock market. As of January 14, the Korea Composite Stock Price Index KOSPI hit a historic high, breaking through the 4700-point mark for the first time ever. With sectors with more verifiable fundamentals like semiconductors, AI, shipbuilding, and national defense军工 (军工 - military industry), DAT obviously cannot compare.
But regardless, the positive signal released by South Korea's policy shift is still worthy of recognition and anticipation. In the coming year, as the relevant guideline details are finalized and laws are improved, the actual investment actions of Korean companies deserve close attention. However, for the加密 (加密 - encryption/crypto) industry itself, the key problem to overcome now is to develop new narratives and重新获得 (重新获得 - regain) widespread participation from Korean investors.
