A Transformative Shift in Digital Asset Policy
South Korea is preparing to dismantle a nine-year prohibition on corporate investments in cryptocurrencies, marking a decisive turn in the nation’s financial regulatory landscape. The Financial Services Commission (FSC) has crafted new guidelines that will permit listed corporations and professional investors to allocate a portion of their capital to digital assets. This policy reversal signals a move away from the strict restrictions imposed in 2017, when authorities categorized cryptocurrency investments as non-productive speculative activity and barred Initial Coin Offerings entirely. With the final regulations expected to be finalized by February, corporations could begin making investments by the end of 2026, reintegrating South Korea into the global digital asset economy.
The decision comes under the administration of President Lee Jae-myung, who took office in 2025 and has championed a more crypto-friendly approach. Regulators have gradually softened their stance over the years, initially allowing non-profit organizations and crypto exchanges to liquidate holdings for financial management. This latest step expands those permissions to the broader corporate sector, acknowledging the growing maturity and permanence of the cryptocurrency market. The FSC aims to balance the need for financial innovation with risk management, ensuring that the re-entry of institutional players does not destabilize the local economy.
The Framework for Corporate Investment
According to the proposal, the new framework will establish specific parameters to manage exposure and risk. Eligible firms will be allowed to allocate up to 5% of their equity capital annually to digital assets. This cap is designed to prevent companies from over-leveraging themselves in a volatile market while still providing meaningful room for portfolio diversification. The investments must be strictly limited to the top 20 cryptocurrencies by market capitalization listed on Korea’s five major exchanges. This restriction ensures that corporate funds flow into assets with higher liquidity and established market track records, rather than smaller, speculative tokens.
Transactions will be confined to South Korea’s five largest regulated exchanges: Upbit, Bithumb, Korbit, INEX, and Coinone. By mandating the use of these domestic platforms, regulators intend to maintain close oversight of transactions and ensure compliance with local laws. However, one area of ongoing debate involves the inclusion of stablecoins. Discussions continue regarding whether dollar-pegged assets such as USDT will be classified as permissible investment assets under the new rules. The outcome of this decision will significantly influence how corporations manage risk and move capital between global and local markets.
Regulators are also implementing measures to mitigate market volatility. Planned controls include split trading requirements and price limits intended to manage liquidity risks as institutional funds enter the space. The government plans to announce measures to allow publicly listed companies and entities listed as professional investors to trade on crypto exchanges within the second half of 2025, accompanied by these additional anti-money laundering mandates. The approach reflects a gradual opening rather than a wholesale liberalization, prioritizing stability above unrestricted access.
From Ban to Integration: A History of Regulatory Caution
The origin of the ban dates back to 2017, a period when the global crypto market was experiencing a frenzied boom. At the time, South Korean regulators were deeply concerned about the potential for money laundering, market overheating, and threats to financial stability. The government framed crypto investments as non-productive speculation and enacted a blanket ban on corporate investments and Initial Coin Offerings. For nearly a decade, this policy kept major South Korean corporations on the sidelines, forcing them to look to foreign jurisdictions if they wished to gain exposure to digital assets.
The persistence of this ban created an unusual dynamic within the South Korean market. While the country developed one of the most active retail crypto trading environments in the world, the institutional side remained largely dormant. South Korea is home to a massive spot crypto market, with local retail investors known for their heavy focus on altcoins. As of the end of last year, South Korea had 9.7 million crypto exchange users, representing nearly 20% of its total population. Despite this high engagement, the lack of institutional participation contributed to structural inefficiencies and capital flight, as companies and funds sought opportunities in jurisdictions with more welcoming regulations.
The shift in policy is not an isolated event but part of a broader strategic realignment. Under President Lee Jae-myung, authorities have moved to re-integrate digital assets into the financial system. Last year’s move to allow non-profit organizations and exchanges to liquidate crypto holdings served as a pilot, testing the waters for the broader inclusion of corporate entities. This phased approach demonstrates a cautious but clear intent to modernize the financial framework and adapt to the evolving global economic landscape.
Market Impact and Potential Capital Inflows
Analysts anticipate that the lifting of the ban could unlock substantial capital, with estimates suggesting that tens of trillions of won could flow into the domestic market. Experts from Seoul Economic Daily anticipate that more than 3,500 corporations will enter the market once the rules are in place. This influx of institutional capital could fundamentally alter the composition of the South Korean crypto market, reducing the dominance of retail traders and increasing liquidity and stability.
To illustrate the potential scale of investment, analysts often point to Naver, the internet giant with a capital of 27 trillion won ($18.4 billion). Within the 5% limit, Naver could theoretically acquire about 10,000 Bitcoin. Such purchases by major conglomerates could provide a significant liquidity boost and lend further legitimacy to the asset class. The reopening of corporate access is also expected to accelerate the launch of a national stablecoin and the approval of spot Bitcoin ETFs, issues that have long been stalled under the previous regulatory regime.
Furthermore, the change may help reverse the trend of capital leaving the country. In 2025 alone, nearly US$110 billion in crypto assets left South Korea amid restricted institutional participation. By providing a legal and regulated pathway for domestic corporations to invest, the government hopes to repatriate these funds and stimulate domestic investments in digital assets. Opening corporate access to the market is also expected to boost the development of local crypto companies, blockchain startups, and the digital asset token (DAT) sector.
Industry Concerns Over Investment Caps
While the overall shift has been welcomed across the industry, some proponents argue that the 5% investment cap may be excessive. Critics suggest that this limitation could leave South Korea at a disadvantage compared to jurisdictions such as the United States, Japan, and the European Union, where no such restrictions exist on corporate crypto holdings. They argue that while the intention is risk management, the cap could inadvertently stifle innovation and limit the growth of specialized virtual asset management firms within the country.
“Investment limits, which do not exist overseas, could weaken the inflow of funds and prevent the emergence of specialized virtual currency investment companies,” one industry insider noted during discussions on the new guidelines.
This sentiment highlights a tension between regulatory caution and competitive positioning. While South Korea moves to open its market, neighboring jurisdictions are taking varied approaches. Hong Kong and Japan, for instance, have recently tightened oversight of corporate crypto exposure to reduce systemic risk. Conversely, the United States and the European Union allow broader participation without percentage caps. South Korea’s policy attempts to find a middle ground, allowing participation while strictly defining the boundaries of that participation to mitigate perceived systemic risks.
Compliance and Security Measures
Accompanying the lift on the ban is a mandate for stricter compliance measures. South Korea is requiring local crypto exchanges and banks to strengthen their know-your-customer (KYC) measures for new institutional clients. Starting in June, specific non-profit organizations and registered crypto exchanges were allowed to sell their crypto in South Korea, acting as a precursor to the full corporate lift. The FSC has stated that crypto exchanges and their partner banks must verify and examine the source of funds and the purpose of transactions for new institutional clients in detail.
Stricter KYC measures are intended to protect the local crypto and financial market from money laundering risks, addressing the primary concern that led to the 2017 ban. The regulator stipulated that institutions and their CEOs must be monitored for potential money laundering-related activities. The Korea Federation of Banks and Digital Asset Exchange Association (DAXA) is expected to distribute these instructions to exchanges and banks, ensuring a unified standard of compliance across the industry. By pairing the expansion of access with rigorous enforcement, the FSC hopes to prevent the illicit financial activities that previously plagued the sector.
Broader Legislative Context
The corporate investment framework fits within a wider national digital asset strategy. The government plans to execute 25% of national treasury transactions through a central bank digital currency by 2030 as part of its 2026 Economic Growth Strategy. Additionally, the government plans to introduce a licensing regime for stablecoin issuers. Under the proposal, issuers would need to maintain 100% reserve backing and provide legally guaranteed redemption rights for users. Together, these measures suggest South Korea is seeking to integrate crypto assets, stablecoins, and a CBDC into a single regulatory framework.
However, crypto-related rule-making has faced delays. The Digital Asset Basic Law, which would establish comprehensive standards for stablecoin issuance, custody, and investor protection, has been postponed to 2026. Regulators are currently debating whether the oversight of stablecoin reserves should be handed to the FSC or the Bank of Korea, and which institutions should be permitted to issue won-pegged stablecoins under the upcoming regulatory framework. Until these broader legislative pieces are finalized, the corporate investment guidelines will serve as a critical bridge, allowing institutional participation while the wider legal architecture is completed.
Key Points
- South Korea plans to lift a nine-year ban on corporate crypto investments, with guidelines finalized by February 2026.
- Corporations can allocate up to 5% of their equity capital annually to the top 20 cryptocurrencies on five major exchanges.
- The policy shift aims to stop capital flight, which saw nearly $110 billion leave the country in 2025.
- Stricter AML and KYC measures will be enforced on institutional clients to mitigate money laundering risks.
- Industry experts express concern that the 5% cap is restrictive compared to the US, Japan, and EU.
- The move is part of a broader strategy that includes a central bank digital currency and stablecoin licensing regime.
