Author: Zen, PANews
The South Korean cryptocurrency market may be entering a new landscape, with a shift from a retail-dominated environment to one where institutions are absent.
On January 14, the Korea Composite Stock Price Index (KOSPI) broke the 4700-point mark for the first time in history, setting a new record. As the South Korean stock market opened with joy, significant positive news quietly emerged from the country's cryptocurrency market.
According to South Korean media reports, the Financial Services Commission (FSC) plans to lift the ban on corporate cryptocurrency investments that has been in place since 2017, intending to allow listed companies and professional investors to participate in cryptocurrency trading. During a government-private sector working group meeting on January 6, the FSC shared a draft of the relevant guidelines.
Breaking a Nine-Year Ban: Korean Listed Companies Will 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. The original plan was to conduct pilot tests in the second half of last year, allowing some risk-tolerant institutional investors to open real-name trading accounts for investment and financial purposes.
The target group approved to participate in the pilot project includes 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 have been allowed to invest in the most risky and volatile derivatives, and these companies have a high demand for blockchain-related businesses and investments.
According to the Seoul Economic Daily, the FSC plans to allow eligible corporate entities to invest up to 5% of their net assets in cryptocurrency each year. The new regulations also specify the range of investable cryptocurrencies, limiting purchases to the top 20 cryptocurrencies by market capitalization, focusing on mainstream coins with good liquidity and larger scales, such as Bitcoin and ETH.
The specific rankings will be determined based on data published every six months by the alliance DAXA, composed of the five major cryptocurrency exchanges in South Korea. The regulatory authorities are still discussing whether dollar-pegged stablecoins (such as USDT) should be included and have not yet provided a clear opinion.
Additionally, regarding the trading execution mechanism, it requires exchanges to split and batch execute large cryptocurrency trades when matching orders and set limits on the size of individual orders. This means that large buy and sell orders must be split into smaller orders for gradual execution, and abnormal trading behaviors will be monitored to reduce market price impact and prevent manipulation and liquidity risks. This mechanism aims to ensure that the market remains stable after institutional funds enter.
It should be noted that the provisions in the draft of the new regulations are not final. The FSC emphasized in a statement that the guidelines are still under discussion and formulation, and core details such as investment limits and investable assets have not yet been finalized. Sources indicate that the FSC expects to publish the final guidelines as early as January to February 2026. If the guidelines are successfully implemented, corporate cryptocurrency trading is expected to officially commence before the end of 2026.
Distorted Market Structure Under Restrictive Policies: Retail Frenzy, Institutional Absence
The relaxation of the corporate cryptocurrency investment ban by South Korean regulators marks a significant shift since the implementation of strict regulatory policies in 2017.
In 2017, cryptocurrencies represented by Bitcoin experienced explosive growth in South Korea, highlighting the "kimchi premium," with retail speculation surging and phenomena such as ICOs causing regulatory concerns. On the other hand, due to anti-money laundering and financial crime prevention considerations, South Korean authorities were worried that large amounts of funds could evade regulation through cryptocurrency assets. Consequently, financial authorities quickly implemented several emergency measures, including prohibiting corporate entities from participating in cryptocurrency trading.
The nine-year corporate ban fundamentally changed the participation structure of the South Korean cryptocurrency market. The market's trading participants were almost entirely filled by retail investors, while large institutions and corporate funds were isolated from the market, leading to relatively limited trading volume and activity in South Korea. At the same time, some institutions and high-net-worth funds seeking to allocate digital assets chose to move to overseas markets in search of more relaxed investment channels.
The dominance of retail investors and the absence of institutions in the cryptocurrency market starkly contrasts with the significant proportion of institutions in mature markets. Therefore, while the strict ban in 2017 initially effectively curbed local speculation, it also led to a disconnection between the South Korean market and the global trend of institutionalization.
In fact, South Korean regulatory authorities have gradually begun to loosen restrictions on institutions' cryptocurrency involvement in recent years. Over the past few years, as cryptocurrency assets have matured globally, the participation of financial institutions has significantly increased, and South Korean authorities have begun to realize that continuing to adhere to outdated practices would inevitably result in missed development opportunities. The South Korean government's "2026 Economic Growth Strategy" explicitly includes digital assets in the future financial landscape.
Since last year, South Korea has tentatively relaxed some regulations, such as allowing non-profit organizations and cryptocurrency exchanges to sell their held cryptocurrency assets. With the new guidelines proposed by the FSC, the regulatory authorities have finally reopened the door for corporate cryptocurrency investments, making a significant correction to the strict regulatory policies and becoming an important part of South Korea's digital financial strategy.
Major New Forces Entering the Market, Encountering a Cooling DAT Narrative
The South Korean cryptocurrency market has long been known for its high speculation and enthusiastic retail investors, and the impending lifting of restrictions on thousands of large companies and professional institutions, allowing them to enter as major new forces, undoubtedly brings a lot of imagination to the industry.
Some South Korean media have cited examples, such as the South Korean internet giant Naver, which is acquiring the parent company of the cryptocurrency exchange Upbit, having a book equity of 27 trillion won, theoretically allowing it to purchase about 10,000 Bitcoins at the 5% limit. Such a massive influx of institutional funds will significantly enhance the liquidity and depth of the local market. Industry insiders expect this move to attract Korean capital that has been observing overseas markets to flow back, entering the domestic cryptocurrency market through legal channels, supporting the development of the local trading ecosystem, with potential inflows after the ban being as high as several tens of trillions of won (over 10 billion USD).
Moreover, under the previous ban, large companies were unable to engage in the cryptocurrency field, which somewhat suppressed their enthusiasm for exploring blockchain technology and digital assets. After the opening, it is expected that local cryptocurrency companies, blockchain startups, and related industries such as digital asset custody and venture capital will receive indirect boosts.
Cointelegraph analysis points out that the entry of institutions will drive the expansion of local cryptocurrency companies and startup projects in South Korea and give rise to the emergence of Digital Asset Treasuries (DAT). At the same time, allowing legal holding of cryptocurrencies is also expected to promote cooperation on cross-border blockchain projects and attract overseas cryptocurrency institutions to operate in South Korea, overall enhancing South Korea's status as an Asian cryptocurrency financial center.
However, whether the DAT strategy will be effective in South Korea also faces multiple challenges. On one hand, policy restrictions make it difficult for South Korea's version of "treasury companies" to fully unleash their potential, as the 5% investment limit means that the proportion of investment in cryptocurrencies is relatively low. On the other hand, among the cryptocurrency treasury companies in the market, apart from pioneers like Strategy that have been established for many years, the vast majority have suffered significant losses due to the "double decline" of cryptocurrencies and stocks, causing the DAT narrative to cool to a freezing point, with global investors showing little interest.
More convenient investment channels also weaken the necessity of the DAT strategy. As major global markets advance the launch of compliant investment products such as Bitcoin spot ETFs, institutions and investors can directly share in Bitcoin price increases through ETFs. Since there are already simpler and safer investment tools like ETFs, there is naturally less enthusiasm for paying a premium for listed companies' cryptocurrency holdings. South Korea is also promoting the launch of spot ETFs based on assets like Bitcoin, which may officially go live as early as the end of this year.
Another factor that cannot be ignored is that, according to market observations, the South Korean cryptocurrency market saw a continued decline in heat in the second half of last year, with many investors turning to the stock market. As of January 14, the KOSPI broke the 4700-point mark for the first time in history, setting a new record. With more verifiable fundamentals in sectors such as semiconductors, AI, shipbuilding, and defense, the DAT strategy clearly cannot be compared.
However, regardless of the circumstances, the positive signals released by South Korea's policy shift are still worthy of recognition and anticipation. In the coming year, as the relevant guidelines are finalized and the laws are improved, the actual investment actions of South Korean companies will be worth close attention. However, for the cryptocurrency industry, it is crucial to strengthen itself, present a new narrative, and regain broad participation from South Korean investors, which is the key challenge to overcome at present.
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