South Korea's crypto regulatory signals strengthen: selling Bitcoin, restricting stablecoin investments, and setting limits on exchange equity

March 11 News: South Korea has introduced three digital asset-related policy measures within a week, sparking widespread discussion about the country’s cryptocurrency regulation direction. Although the Digital Asset Basic Law is still under development, recent policy moves regarding Bitcoin disposal, stablecoin investment scope, and exchange equity structures are seen by some industry insiders as signs of a more cautious regulatory approach.

First, the Gwangju District Prosecutors’ Office announced it sold 320.88 Bitcoin previously recovered, worth approximately 31.59 billion Korean won (about $21.6 million), with all proceeds deposited into the national treasury. These Bitcoins were recovered from a phishing case. The authorities sold the assets in batches from February 24 to March 6 to minimize market impact. The focus is not on the sale itself but on South Korea’s quick liquidation, contrasting with some countries that view Bitcoin as a long-term national reserve asset.

The second measure involves stablecoin regulation. The Financial Services Commission (FSC) is drafting guidelines that, for the first time, allow listed companies to invest in digital assets. However, local media reports suggest that stablecoins like USDT and USDC are unlikely to be included in the permitted investment scope. Regulators believe that South Korea’s Foreign Exchange Transactions Act currently does not recognize stablecoins as legal cross-border payment tools. Allowing corporate investments could indirectly promote their use in trade settlements. Relevant legal revisions are still under review by the National Assembly.

The third controversial policy concerns restrictions on shareholder ownership ratios in crypto platforms. South Korea’s Democratic Party’s Digital Asset Working Group is discussing setting a cap on major shareholders’ holdings in the Digital Asset Basic Law, with the latest proposal at 34%. This is higher than previous discussions of 15% to 20%, but it still raises questions among academics and some lawmakers. Critics point out that the U.S. and Europe have no such restrictions and worry that overly dispersed ownership could weaken platform decision-making during market crises.

From a policy perspective, these measures address different issues such as judicial asset disposal, legal system coordination, and investor protection. However, from a market perspective, the continuous policy signals are interpreted by some investors as signs that South Korea is tightening its digital asset regulatory environment. As the specific provisions of the Digital Asset Basic Law are still under discussion, the final direction of South Korea’s crypto policy framework remains to be seen in the coming months.