South Korea Eases Crypto Trading Restrictions for Non-Profits and Exchanges

South Korea’s financial regulator, the Financial Services Commission (FSC), has announced new rules that will allow non-profit organizations and virtual asset exchanges to sell their crypto holdings starting in June. This move is part of a broader effort to tighten oversight while providing operational flexibility within the cryptocurrency market.

The FSC had previously imposed a ban in 2017 that restricted corporations and banks from trading cryptocurrencies to prevent "overheated speculation." In February, the FSC revealed plans to lift this ban, and the details of the new framework were finalized earlier this month.

Under the new regulations, non-profit organizations must meet stringent conditions, including having at least five years of audited operations and forming internal committees to review donations. These organizations will only be able to accept cryptocurrencies listed on at least three Korean won-based exchanges and will generally be required to sell donated tokens immediately.

Virtual asset exchanges will also be permitted to sell cryptocurrencies, but only to raise operating capital. They will face daily sale limits and will be prohibited from selling through their own platforms. Only the top 20 coins by market capitalization traded on major Korean exchanges will be eligible for sale. All transactions must adhere to the same anti-money laundering standards applied to other virtual asset service providers.

The FSC has also tightened listing rules for local crypto exchanges. These exchanges will need to filter out what the FSC refers to as “zombie” coins—those with low trading volume or market cap—and set higher standards for listing memecoins, such as user base or transaction history thresholds. The goal is to reduce sudden price spikes and enhance investor protection. The updated listing standards will take effect in June.

The FSC plans to extend these rules to corporations and institutional investors later this year, as indicated in February. This expansion aims to further regulate the cryptocurrency market and ensure that all participants adhere to the same standards of oversight and transparency.