South Korea Ends 9-Year Corporate Crypto Ban as Market Reforms Take Shape

South Korea’s Financial Services Commission (FSC) has reportedly finalized new guidelines to allow listed companies and professional investors to trade cryptocurrencies. The move ends a nine-year ban on corporate participation, which was introduced in 2017 to prevent money laundering. The new rules permit eligible firms to invest up to 5% of their equity capital in top-20 cryptocurrencies listed on Korea’s five largest exchanges.

The policy change is part of the 2026 Economic Growth Strategy, which includes broader measures such as stablecoin licensing, digital asset ETF approvals, and the introduction of a central bank digital currency (CBDC) for 25% of national treasury operations by 2030. According to analysis, the FSC plans to release final rules in January or February, with corporate trading expected to start by year-end.

Industry participants have welcomed the reform but argue the 5% cap is conservative compared to global standards. Critics say it could hinder the development of domestic digital asset treasuries and institutional investment in strategic Bitcoin holdings.

Why the Move Happened

The ban on corporate crypto investment led to significant capital outflows, with over $110 billion leaving South Korea in 2025 as investors sought offshore platforms offering more complex products. Domestic exchanges, restricted to spot trading, struggled to compete with global rivals like Binance and Bybit. The FSC cited concerns about market stability and the need to align crypto regulation with traditional finance as key factors in the policy reversal.

Retail investors have dominated the Korean crypto market for years, accounting for nearly 100% of trading activity. However, this dynamic has also led to sharp price swings and persistent capital flight. Regulators hope the new framework will attract institutional liquidity and reduce reliance on foreign markets.

How Markets Responded

Market participants have expressed cautious optimism about the reforms. The inclusion of stablecoins like Tether’s USDT remains under discussion, and final guidelines will clarify their eligibility for corporate investment. Large South Korean firms, such as those with significant equity capital, could potentially begin acquiring major crypto positions once the rules take effect.

The FSC has also introduced technical safeguards, including limits on order sizes and execution methods, to manage volatility as institutional liquidity enters the system. These measures aim to prevent sharp price swings and ensure orderly trading.

What Analysts Are Watching

Analysts are closely monitoring the impact of the new policy on local crypto companies and blockchain startups. The easing of restrictions could lead to the emergence of digital asset treasuries and boost domestic investment in digital assets.

Investors are also watching for further regulatory developments, including the introduction of the Digital Asset Basic Act in Q1 2025 and the potential approval of spot Bitcoin ETFs. The government has stated that digital assets remain excluded from ETF regulations, but amendments are under study.

The FSC is reviewing additional measures to strengthen market oversight, such as the potential pre-freezing of crypto accounts suspected of price manipulation. This would mirror tools already used in the stock market and reflect the government’s broader push to align crypto regulation with traditional finance standards.

As South Korea moves to overhaul its crypto framework, investors and market participants are bracing for a period of transition. The reforms could reshape the domestic market, attract international capital, and reduce reliance on offshore platforms.

The finalization of the Digital Asset Basic Act and the implementation of the new corporate investment rules will determine the long-term success of the regulatory shift. Analysts will continue to monitor how domestic and global markets respond to the evolving regulatory landscape.