South Korea’s Financial Regulators Stall Corporate Cryptocurrency Investment Guidelines

The South Korean cryptocurrency market has been left in limbo for eight months since the announcement of government plans to enable listed companies and professional investment firms to delve into digital asset investments. Despite the promise of impending regulatory clarity, comprehensive guidelines remain elusive. Industry experts are increasingly concerned that further delays could exacerbate the “Galapagos effect,” isolating South Korea from global financial and technological advancements in digital assets.

Cryptocurrency Investment Guidelines Fall Behind Schedule

In February, South Korea’s Financial Services Commission (FSC) revealed ambitious plans aimed at permitting digital asset investments by non-financial listed corporations and approximately 3,500 registered professional investment firms under the Capital Markets Act. However, industry insiders reported on October 20 that the FSC has made minimal progress toward finalizing these guidelines. With just two months remaining in 2023, the likelihood of any substantial regulatory breakthroughs before year-end appears increasingly slim.

While the FSC did release a limited guideline back in May addressing nonprofit entities and cryptocurrency exchanges for digital asset sales, this fell short of offering clear protocols for corporate investments in the sector. With these delays, businesses interested in utilizing or holding cryptocurrencies are left without an approved framework, hindering corporate engagement in the burgeoning digital asset environment.

Organizational Restructuring Creates Bottlenecks

The ongoing discussions about dissolving the FSC and delegating its policymaking functions to the Financial Supervisory Service (FSS) have further disrupted regulatory progress. The political wrangling surrounding this potential organizational restructuring has pushed digital asset policy down the priority list, creating further confusion and weakening momentum for reform. Without consistent leadership and clarity, future initiatives for expanding cryptocurrency-related corporate investments remain hazy.

An industry expert highlighted this bureaucratic disruption, stating, “The restructuring debate has taken its toll, paralyzing critical policy efforts on digital asset investments. Although non-financial companies and professional investors are supposed to operate under current guidelines, these frameworks have yet to materialize. Expanding the scope to include general corporations is a distant prospect under these circumstances.”

At the KBW2025 event in September, Jin Myung-gu, Head of External Policy at Korbit, raised doubts about whether the FSC would implement its roadmap in the near future. Divided into three distinct phases, this roadmap aimed to regulate corporate cryptocurrency investments in South Korea progressively. Phase two was intended to focus on professional investment firms beyond financial institutions, while phase three was set to include general corporations. According to Jin, delays make tangible progress into these phases unlikely to occur even by next year.

South Korea Risks Losing Ground in Cryptocurrency Race

As South Korea stalls on corporate inclusion in digital asset investments, other global markets are advancing rapidly. Countries such as the United States and members of the European Union are moving forward with regulatory frameworks that embrace blockchain technology for tokenized real-world assets (RWAs). By integrating digital assets into traditional financial systems and improving efficiency, these regions are positioning themselves as hubs for cryptocurrency innovation.

In stark contrast, South Korea’s regulatory structure remains rigid and risk-averse, skewed heavily toward retail cryptocurrency trading while prohibiting more advanced trading options such as non-spot transactions. Restrictions against foreign investors further limit the nation’s ability to foster international business partnerships within its digital asset ecosystem. This inflexible stance is eroding South Korea’s appeal to institutional players and driving capital to more accommodating global exchanges.

Yang Hyun-kyung, a researcher at IM Securities, highlighted this growing gap, noting that while countries like the U.S., EU, and Hong Kong actively integrate corporations into the cryptocurrency economy, South Korea continues to adopt overly prohibitive policies. “Although there were hopes for progress under the new administration, the failure to bolster corporate participation leaves South Korea vulnerable and accelerates the ‘Galapagos effect,’ isolating the market from global advancements,” Yang said.

The Case for Corporate Involvement in the Digital Asset Market

Industry leaders argue that enabling corporate participation in cryptocurrency investments is not just a potential avenue for growth—it’s a necessity. Korbit’s Jin emphasized the transformative impact of institutional players in global digital asset markets, noting that corporate and professional investors drive 80% of trading volume and constitute 60% of revenue on Coinbase, one of the world’s leading cryptocurrency exchange platforms. Without corporate inclusion, South Korean exchanges stand little chance of competing internationally.

Lobbying efforts from stakeholders within the cryptocurrency sector have grown louder, calling on regulatory bodies to accelerate policy adoption. Proponents believe corporate-friendly regulations would attract institutional players, drive innovation, and reposition South Korea as a competitive force in global digital markets.

Urgent Need for Proactive Policy Reform

Time is of the essence for South Korea’s digital asset sector. As international markets continue to implement progressive frameworks, South Korea faces increasing pressure to update its restrictive policies. The delay in issuing guidelines for corporate cryptocurrency investments threatens to push the country further into isolation—a costly move in a rapidly evolving global financial landscape.

To avoid losing its foothold altogether, South Korea must prioritize regulatory reforms that align its policies with the accelerating adoption of digital assets worldwide. A shift toward enabling corporate and institutional participation could not only revitalize the domestic cryptocurrency market but also strengthen the country’s position as a competitive player in the global digital economy.