South Korean Authorities Seek 5% Cap on Corporate Crypto Investments: Report

South Korea has ended a nine-year ban on corporate cryptocurrency investment, permitting listed companies and professional investors to allocate up to 5% of their equity to top-20 cryptocurrencies. The Financial Services Commission (FSC) reportedly finalized new guidelines, marking a regulatory shift that could unlock significant capital from approximately 3,500 eligible entities. This development aligns with South Korea's broader 2026 economic strategy, which includes regulatory moves toward digital assets, including the approval of spot Bitcoin ETFs and stablecoin legislation.

The 5% cap on corporate crypto investments is viewed as a cautious step, with critics arguing that it is overly restrictive compared to the regulatory approaches in the US, Japan, and the EU. Some industry participants warn the cap could hinder the emergence of Digital Asset Treasury companies in Korea, a model seen in Japan with firms like Metaplanet. The restriction may also limit strategic Bitcoin accumulation opportunities for corporations.

Investments are restricted to the top-20 cryptocurrencies by market capitalization on Korea's five major exchanges. Regulators also plan to require exchanges to implement staggered execution and order size limits. Whether dollar-pegged stablecoins like Tether's USDT will be included remains under discussion.

The end of the corporate crypto ban marks the first regulatory green light for institutional crypto participation since 2017. The prolonged prohibition contributed to a retail-driven crypto market in Korea, where nearly all trading activity comes from individual investors. Critics note that retail dominance has led to capital flight, with $52 billion in offshore investment activity reported.

The FSC plans to release final guidelines by January or February 2026. These rules are part of a larger regulatory overhaul aimed at aligning South Korea with global crypto markets. The strategy includes the introduction of spot Bitcoin ETFs and stablecoin regulations, positioning the country as a digital asset hub.

Why Did This Happen?

The decision to permit corporate crypto investments follows a nine-year prohibition imposed due to concerns about money laundering and market instability. The prolonged ban created a regulatory gap, pushing many investors to offshore platforms offering more complex trading products.

South Korean regulators aim to close this gap by integrating digital assets into institutional financial strategies. The 2026 Economic Growth Strategy includes the Digital Asset Act, which will formalize stablecoin regulation and provide a legal framework for spot ETFs.

The move also reflects the success of spot Bitcoin ETFs in the US and Hong Kong, which have demonstrated institutional demand for digital assets. South Korea's Financial Services Commission appears to be modeling its strategy after these jurisdictions.

How Did Markets Respond?

Market analysts suggest the regulatory shift will accelerate the development of a won-denominated stablecoin and domestic Bitcoin ETFs. Institutional participation is expected to increase, with potential entry by pension funds and asset managers.

However, some critics argue that the 5% cap could prevent South Korea from competing with global crypto hubs. The US, Japan, and EU impose no such restrictions, allowing for more aggressive corporate investment in digital assets.

The government also plans to integrate blockchain technology into public finance by 2030. A pilot program will use deposit tokens for electric vehicle subsidies in 2026. These tokens are backed by commercial bank deposits and designed to reduce fraud and streamline payments.

What Are Analysts Watching Next?

Analysts are closely monitoring how the new regulations will impact South Korea's crypto market structure. The 5% cap may limit the ability of Korean firms to compete with global Digital Asset Treasury models.

Regulators are also under pressure to finalize stablecoin legislation and ETF approvals within the first quarter of 2026. The success of the policy shift will depend on how quickly institutional investors adopt the new framework.

Market observers will also track the impact of the regulatory changes on capital outflows. South Korea saw over $110 billion in crypto moved offshore in 2025 due to strict trading rules. The new regulations aim to reduce this trend by offering more competitive investment opportunities.