South Korea to Lift 9-Year Corporate Crypto Investment Ban

Original Author: Zen, PANews

The South Korean cryptocurrency market may be entering a new phase, with a shift in the situation where retail investors have dominated and institutional investors have been absent.

On January 14, the Korea Composite Stock Price Index (KOSPI) hit a record high of over 4,700 points for the first time in its history, setting a new all-time high during intraday trading. As the South Korean stock market welcomed this positive start, the country's cryptocurrency market also quietly delivered significant good news.

According to a South Korean media report, the Financial Services Commission (FSC) of South Korea plans to lift the ban on corporate investment in cryptocurrencies, which has been in place since 2017. The FSC intends to allow listed companies and professional investors to participate in cryptocurrency trading. On January 6, the FSC shared a draft of relevant guidelines during a government-private sector working group meeting.

This new regulation, in essence, is the FSC's (Financial Supervisory Commission) initiative from February last year.Announcea continuation and further refinement of its "Virtual Asset Market Development Plan." The original plan was to conduct pilot testing in the second half of last year, allowing certain risk-tolerant institutional investors to open verified trading accounts for investment and financial purposes.

The target group approved to participate in the pilot program consists of approximately 3,500 publicly listed companies and businesses registered as professional investors under the Capital Markets Act, excluding financial institutions. According to the FSC, professional investors registered under the Capital Markets Act have already been permitted to invest in derivatives with the highest risk and volatility, and these companies have a strong demand for blockchain-related businesses and investments.

According to the Seoul Economic Daily, the Financial Services Commission (FSC) plans to allow qualified legal entities to invest up to 5% of their net assets annually in cryptocurrencies. The new regulations also define the range of investable cryptocurrencies, limited to the top 20 largest cryptocurrencies by market capitalization, focusing on major coins with strong liquidity and larger market size, such as Bitcoin and Ethereum (ETH).

The specific rankings are determined based on data published every six months by DAXA, an alliance composed of South Korea's five major domestic cryptocurrency exchanges. As for whether dollar-pegged stablecoins (such as USDT) should be included, regulatory authorities are still discussing the matter and have not yet provided a clear decision.

In addition, regarding the execution mechanism for transactions, it requires exchanges to split and execute large cryptocurrency trades in batches and to set limits on the size of individual orders. In other words, large buy or sell orders must be split by the exchange into smaller orders for gradual execution, while also monitoring abnormal trading activities. This is intended to reduce the impact on market prices and prevent manipulation and liquidity risks. This mechanism aims to ensure that the market can remain stable and operate smoothly even after large institutional funds enter.

It should be noted that the provisions in the above-mentioned draft regulations are not final. In its statement, the FSC stated that...EmphasizeThe guidelines are still under discussion and formulation, and core details such as investment limits and eligible assets have not yet been finalized. According to informed sources, the FSC is expected to release the final guidelines as early as January to February 2026. If the guidance is smoothly implemented, corporate entities' cryptocurrency transactions could officially commence before the end of 2026.

South Korea's regulatory authorities relaxing the ban on corporate cryptocurrency investments marks a significant shift since the implementation of strict regulatory policies in 2017.

In 2017, cryptocurrencies, led by Bitcoin, experienced explosive growth in South Korea, highlighting the "Kimchi Premium" phenomenon. Retail investors became highly enthusiastic about speculation, while various issues such as initial coin offerings (ICOs) emerged, raising concerns among regulators. On the other hand, due to anti-money laundering and financial crime prevention considerations, the South Korean authorities were worried that large sums of money could bypass regulation through cryptocurrency assets. As a result, the financial authorities quickly introduced a series of emergency measures, including a ban on institutional participation in cryptocurrency trading.

A nine-year corporate ban has fundamentally changed the structure of participation in South Korea's cryptocurrency market. Almost entirely filled with retail investors, the market has been largely cut off from large institutional and corporate capital, resulting in relatively limited trading volume and activity. At the same time, some institutional and high-net-worth investors seeking to allocate digital assets have chosen to move overseas in search of more lenient investment channels.

The retail-dominated and institution-absent structure of the cryptocurrency market also sharply contrasts with the significant presence of institutional investors in mature markets. Therefore, although the strict ban in 2017 initially effectively curbed domestic speculative fervor, it also, to some extent, caused the Korean market to fall out of step with the global trend toward institutionalization.

In fact, South Korean regulatory authorities have gradually been easing restrictions on institutions regarding cryptocurrencies in recent years. Over the past few years, as crypto assets have progressively matured on a global scale and participation by financial institutions has significantly increased, South Korean authorities have also begun to realize that continuing with outdated approaches would result in missed development opportunities. In the South Korean government's "2026 Economic Growth Strategy," digital assets are explicitly included in the future financial landscape.

Since last year, South Korea has cautiously relaxed some regulations, such as allowing non-profit organizations and cryptocurrency exchanges to sell their held crypto assets. With the new guidelines proposed by the Financial Services Commission (FSC) this time, regulators have finally once again given the green light for corporate crypto investments, making a significant revision to the strict regulatory policies and marking an important step in South Korea's digital financial strategy.

The Korean cryptocurrency market has long been known for its high levels of speculation and enthusiastic retail investors. The upcoming delisting of thousands of large enterprises and professional institutions, which will be permitted to enter the market as powerful new players, undoubtedly brings ample room for imagination and speculation to the industry.

According to a South Korean media report, Naver, a major South Korean internet company currently acquiring the parent company of the domestic cryptocurrency exchange Upbit, holds equity assets of 2.7 trillion South Korean won. Theoretically, under a 5% cap, it could purchase approximately 10,000 Bitcoin. The entry of such a large institutional capital would significantly enhance liquidity and depth in the local market. Industry insiders predict that this move will attract South Korean capital currently waiting in overseas markets to return, entering the domestic crypto market through legal channels. This would support the development of the local trading ecosystem, and the potential inflow after restrictions are lifted could reach tens of trillions of South Korean won (over $100 billion).

In addition, under previous restrictions, large companies were unable to enter the cryptocurrency sector, which to some extent suppressed corporate interest in exploring blockchain technology and digital assets. With the relaxation of these restrictions, it is expected that domestic cryptocurrency companies, blockchain startups, and related industries such as digital asset custody and venture capital will receive indirect boosts.

Cointelegraph's analysis points out that institutional participation will drive the expansion of local Korean crypto companies and startup projects, leading to the emergence of enterprise-level digital asset treasuries (DAT). At the same time, the legalization of holding digital assets is expected to promote cross-border blockchain project collaborations and attract overseas crypto institutions to operate in South Korea, thereby enhancing the country's position as a leading center for crypto finance in Asia.

However, the DAT strategy in South Korea also faces multiple challenges in terms of effectiveness. On one hand, policy restrictions limit the scope of South Korea's version of "treasury companies," with an investment cap of only 5%, meaning a relatively low allocation to cryptocurrencies. On the other hand, most cryptocurrency treasury companies in the market, aside from pioneers like Strategy that have been operating for years, have suffered significant losses due to the simultaneous decline in both crypto and stock prices. As a result, the DAT narrative has cooled to an icy low, and global investors have largely lost interest in it.

More convenient investment channels also reduce the necessity of the DAT strategy. As major global markets advance the implementation of compliant investment products such as Bitcoin spot ETFs, institutions and investors can directly benefit from Bitcoin's price appreciation through ETFs. Since there are already simpler and safer investment tools like ETFs available, investors naturally won't be eager to pay a premium for corporate Bitcoin holdings. Currently, South Korea is also progressing with the development of spot ETFs based on assets like Bitcoin, which could potentially launch as early as the end of this year.

Another factor that cannot be ignored is the observation from the market that the Korean cryptocurrency market has continued to lose momentum since the second half of last year, with a large number of investors shifting their focus to the stock market. As of January 14, the Korea Composite Stock Price Index (KOSPI) hit an intraday record high, breaking through the 4,700-point level for the first time in history. Sectors with more verifiable fundamentals, such as semiconductors, AI, shipbuilding, and defense and military industries, are clearly more attractive than DAT.

Nevertheless, the positive signals from South Korea's policy shift are still commendable and worth anticipating. Over the next year, as detailed guidelines and legal frameworks are implemented and improved, the actual investment actions of South Korean companies will be worth close attention. However, for the cryptocurrency industry, the key challenge at present remains strengthening its own fundamentals—developing new narratives and regaining broad participation from South Korean investors.