South Korea is taking a cautious yet significant step into the world of cryptocurrency by lifting a nine-year ban on corporate crypto trading. The Financial Services Commission (FSC) has introduced new guidelines that will allow listed entities and professional investment firms to reenter the market, marking a pivotal shift in the nation’s approach to digital assets.
Why the Ban Was Lifted
The ban on corporate crypto trading, imposed in 2017, was a response to rampant retail speculation and concerns over money laundering, market manipulation, and financial stability. Regulators restricted corporate and institutional involvement while allowing retail trading under strict compliance rules. This policy led to a market dominated by retail investors and drove capital flows abroad.
New Guidelines for Corporate Crypto Trading
The new framework, which applies to approximately 3,500 organizations, including publicly traded companies and professional investment firms, introduces several key measures to manage risk. Corporate investments in crypto are capped at 5% of annual equity capital, and trading is limited to the top 20 cryptocurrencies on regulated domestic exchanges. These restrictions aim to prevent excessive exposure and maintain market stability.
The Broader Regulatory Strategy
The reintegration of corporate crypto trading is part of South Korea’s broader economic growth strategy, which includes the upcoming Digital Asset Basic Act. This law, expected to be presented in early 2026, will consolidate and streamline existing crypto regulations, addressing areas like exchange oversight, token issuance, custody, and investor protection.
Impact on the Crypto Market
The return of institutional players is expected to bring several benefits, including enhanced liquidity, narrower bid-ask spreads, and a shift away from short-term retail trading. However, the 5% investment limit means that the market impact will be gradual. Corporate participation could also spur the development of new financial products, such as crypto ETFs and structured notes, enhancing South Korea’s competitiveness in the global crypto landscape.
Comparing South Korea’s Approach
South Korea’s cautious approach contrasts with more permissive policies in other major markets. The US and parts of Europe do not impose specific percentage caps on corporate crypto holdings, while Japan and Hong Kong allow institutional involvement without fixed balance sheet exposure. South Korea’s framework reflects a balanced approach, opening the door to crypto assets while restricting the scale of participation until regulators gain more confidence in market stability.
Future Prospects
The FSC is set to release the final guidelines in January or February 2026, with implementation coordinated alongside the Digital Asset Basic Act. Industry associations may push for higher investment limits and a wider range of eligible assets once the initial stage is complete. This cautious opening represents a significant change in South Korea’s approach to digital assets, signaling a shift from crisis-driven restrictions to structured market participation under regulatory supervision. The success of this initiative will depend on market performance, risk management, and the effectiveness of regulatory enforcement.
About the Author
