South Korea to Legalize Crypto ETFs and Develop Stablecoin Framework Before Year-End

South Korea is preparing a major regulatory shift to revive its cryptocurrency market, with the Financial Services Commission (FSC) submitting a comprehensive roadmap for the development of spot crypto exchange-traded funds (ETFs) and a legal framework for stablecoins. This proposal, presented to the Presidential Committee on Policy Planning, aims to integrate digital assets into the country’s financial system and is expected to be finalized before the end of the year [1].

The roadmap outlines a detailed regulatory structure for crypto investment products, including the creation of necessary legal and technical foundations for crypto ETFs. If implemented, these ETFs could become available to South Korean investors as early as late 2025. This marks a significant departure from previous policies, which had banned crypto ETFs due to concerns over market volatility and investor risk [1].

Under the new approach, the FSC will oversee the development of key infrastructure across custody, pricing, fund management, and investor protection. The government is also expected to reduce trading fees from the current 0.05% to 0.015%, aiming to make crypto trading more accessible, particularly for younger investors who have shown growing interest in the space [1].

Alongside ETFs, the roadmap includes plans for a legal framework for stablecoins pegged to the Korean won. These stablecoins could reduce reliance on foreign-issued stablecoins such as USDT or USDC and provide local businesses with a regulated platform for issuing digital tokens. However, the Bank of Korea has expressed a preference for the central bank to issue such stablecoins to maintain systemic stability [1].

The FSC has also emphasized the need for stronger oversight and penalties for illegal activities in the crypto market, including lifetime bans and substantial fines for bad actors. Exchanges will be required to meet higher transparency standards, including public disclosure of trading fees and listing rules. These measures aim to protect investors while fostering a conducive environment for innovation [1].

The shift is part of a broader strategy to align with global financial trends, particularly in markets like the United States and the European Union, where crypto ETFs have already gained traction. South Korea’s goal is to attract both retail and institutional investors, positioning the country as a major hub for digital assets and related financial products [1].

President Lee Jae-myung, who campaigned on a platform of crypto-friendly policies, has made the legalization of crypto ETFs a key part of his economic agenda. His pro-crypto stance contrasts with the previous administration’s more cautious approach and reflects a growing consensus within the government to embrace digital assets as part of the financial ecosystem [1].

The FSC has not yet finalized the policies and will require legislative approval before implementation. Analysts suggest that South Korea is following a similar path to the U.S. and EU, where crypto ETFs have gained momentum, and the success of this initiative could have a lasting impact on the country’s global competitiveness in the digital asset space [1].

Source: [1] South Korea Aims To Revive Crypto Market With ETF ... (https://thecryptobasic.com/2025/08/08/south-korea-aims-to-revive-crypto-market-with-etf-roadmap-and-stablecoin-plans/)