tl;dr
In 2025, South Korea's cryptocurrency market is transitioning from retail-driven growth to a regulated, institutional framework guided by government policies including phased corporate participation, spot Bitcoin ETF regulation, enforcement against unregistered operators, and a pause on CBDC develop...
South Korea’s cryptocurrency market is undergoing a pivotal transformation in 2025, shifting from a retail-driven boom toward a more institutionalized and regulated environment. This shift is guided by four key government policy pillars: phased corporate participation, regulatory frameworks for spot Bitcoin ETFs and pegged stablecoins, strict enforcement against unregistered operators and KYC breaches, and a pause on central bank digital currency (CBDC) development in favor of bank-led stablecoin pilots. The Presidential Committee on Policy Planning has made building a digital asset ecosystem a national agenda under the goal of creating an innovative global economy, with oversight by the Financial Services Commission (FSC).
The FSC unveiled a roadmap to lift the 2017 ban on corporate cryptocurrency trading, allowing nonprofits and public agencies limited sales in early 2025, followed by listed companies and institutional investors later in the year. This aligns with global trends and seeks to protect users through the Virtual Asset User Protection Act effective July 2024. The ministry has also proposed amendments to allow crypto firms to register as venture companies, unlocking financial benefits like tax incentives and subsidies.
While the Bank of Korea has delayed its CBDC pilot to focus on a "banks-first" stablecoin issuance model, four major banks—KB Kookmin, Shinhan, Hana, and Woori—are preparing for the launch of Korean won-pegged stablecoins. The FSC also proposed plans for domestic spot Bitcoin ETFs and KRW stablecoins, addressing custody, pricing, investor protection, and fee structures. These reforms, supported by President Lee’s administration, aim to usher in a more institutional and secure digital asset environment.
Regulatory enforcement is robust, emphasizing compliance and AML/KYC standards. Recent disruptions include the temporary suspension of Upbit’s new user transactions due to AML breaches and the delisting of WEMIX after disclosure failures and a significant theft. Authorities have pressured tech giants like Google and Apple to remove unauthorized crypto exchange apps. Crypto taxation remains contentious, with a 20% capital gains tax postponed to 2027 and potential further delays.
South Korea remains a significant player in global crypto trading, with KRW being the world’s second-most traded fiat in crypto markets, representing 30% of global fiat-crypto activity. Nearly one-third of Korean adults own digital assets, twice the U.S. adoption rate. Upbit dominates the domestic market, followed by Bithumb, which plans a KOSDAQ listing in late 2025. Several smaller players face challenges, leading to asset sales and speculation over acquisitions.
Infrastructure developments and overseas expansions are underway. Kaia, formed from tech giants Kakao and Naver’s blockchain initiatives, aims to become Asia’s first compliant Layer-1 blockchain. Dunamu is expanding into Vietnam, enhancing Korea’s global crypto footprint. Geopolitically, South Korea collaborates internationally to combat North Korean crypto theft, a threat associated with funding weapons programs.
The outlook for 2026 hinges on finalizing ETF frameworks, launching stablecoin pilots, expanding corporate trading, and resolving regulatory disputes like the ongoing Upbit investigation. Risks include overregulation, prolonged legal challenges, capital flight due to restrictive foreign exchange rules, and fallout from token delistings. Success in these areas could solidify South Korea’s position as a balanced crypto-financial hub that pairs strict compliance with innovation, fostering investor protection and market growth.