Key Takeaways
- The Democratic Party has promised to lift restrictions on both local and international ETFs holding crypto, including US Bitcoin ETFs
- People Power Party vowed to delay taxes on digital assets’ profits, scheduled to take effect in 2025.
South Korea is gearing up for parliamentary elections, with political parties strategically appealing to voters, particularly the youth interested in cryptocurrencies. The Democratic Party promises to remove restrictions on both domestic and international exchange-traded funds (ETFs) holding crypto tokens. Meanwhile, President Yoon Suk Yeol’s People Power Party plans to defer taxes on digital assets’ profits scheduled for 2025.
Hwanseok Choi, spokesperson for the Democratic Party, emphasizes their commitment to allowing ETFs regardless of their origin. This commitment follows the cautionary stance of South Korea’s securities regulator against local distribution of Bitcoin ETFs post-approval in January.
Recent statistics reveal that a significant portion of South Korea’s population, around 10%, engaged in crypto trading via registered exchanges in the first half of 2023. Additionally, about 7% of election candidates disclosed ownership of cryptocurrencies.
Despite the promises aimed at crypto voters, expectations loom for tighter regulations on crypto assets. The Financial Services Commission is preparing to introduce new rules for token listings on centralized exchanges.
South Korea has a history of regulating the crypto sector, including the banning of Initial Coin Offerings (ICOs) in 2017 due to concerns over excessive speculation and financial misconduct. The Virtual Asset User Protection Act, passed in July 2023 and set for implementation on July 19, 2024, represents a significant step towards establishing a legal framework for virtual assets.
Under this legislation, the Financial Services Commission will have oversight and inspection authority over service providers, while the Bank of Korea can request data from these entities. The Act also prohibits the dissemination of undisclosed significant information about crypto, market manipulation, and illegal trading.
In efforts to bolster consumer protection, South Korea introduced measures requiring companies and public figures to disclose crypto holdings. Recent amendments to the Act in February 2024 imposed substantial fines and criminal penalties for violations, reflecting the government’s determination to enforce regulatory compliance.
South Korea’s cryptocurrency market remains highly active globally, with reports indicating that Upbit, the country’s largest cryptocurrency exchange, facilitated over $221 billion in spot trading volume in March alone, nearly 9% of the global spot volume. Additionally, South Korean regulators are engaging in discussions with officials from the Association of Southeast Asian Nations (ASEAN) to exchange insights on digital finance policies
