South Korea’s newly elected president, Lee Jae-myung, is pushing a strong pro-cryptocurrency agenda.

He plans to lift the ban on spot cryptocurrency ETFs and introduce a stablecoin market tied to the Korean won to help reduce capital outflows.

His administration also aims to improve crypto regulations, focusing on stablecoin oversight, exchange transparency, and easing restrictions in designated blockchain development zones to boost innovation.

South Korea remains a major player in the global crypto market, with about 20% of its population involved in crypto exchanges.

Lee won the presidency on June 4, 2025, with 49.42% of the vote, defeating right-wing candidate Kim Moon-soo, who got 41.15%.

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🔗 Source: The Block

🧠 Food for thought

1️⃣ South Korea’s crypto market has shown remarkable resilience across regulatory cycles

Despite multiple regulatory waves since 2017, South Korea has maintained its position as a crypto powerhouse, demonstrating unusual market persistence.

The country accounted for 30% of global cryptocurrency trading despite having less than 1% of the world’s population during the first boom in 2017-2018, establishing itself as the third-largest Bitcoin market globally 1.

Even after regulatory crackdowns that caused Bitcoin to drop over $1,000 in a single day in December 2017, the market rebounded, with adoption growing to approximately 18 million users today—more than a third of the population 2.

This persistence can be attributed to unique cultural factors, including widespread acceptance of digital goods, exceptional internet infrastructure, and the view of crypto as a path to social mobility for younger Koreans 13.

The “Kimchi Premium,” where cryptocurrencies traded at higher prices in Korea than on international exchanges, further illustrated the market’s distinctive characteristics and intense local demand 4.

Despite facing some of the strictest compliance measures globally, South Korea’s virtual asset market capitalization exceeded 100 trillion won in 2024, demonstrating remarkable staying power through multiple market cycles 5.

2️⃣ Political attitudes toward crypto have evolved from skepticism to bipartisan embrace

South Korean political discourse on cryptocurrency has undergone a complete transformation over eight years, reflecting broader shifts in how digital assets are viewed by governments worldwide.

In late 2017, government announcements of potential trading crackdowns caused immediate market panic, with officials warning that cryptocurrencies “could not function as actual currency” and posed high risks to investors 6.

By 2018, authorities began implementing formal regulations, requiring real-name bank accounts for trading to prevent anonymity while still supporting “normal cryptocurrency trading” through financial institutions 7.

The current election represents a milestone in this evolution, with both leading candidates pledging pro-crypto policies, including spot crypto ETFs and won-backed stablecoins, marking a rare area of bipartisan agreement 28.

This shift parallels the formalization of the industry, with the 2020 Amendment to financial transaction laws and subsequent Virtual Asset User Protection Act creating increasingly sophisticated regulatory frameworks 79.

The planned introduction of a 20% tax on crypto profits by 2028 further signals the government’s transition from viewing crypto as a speculative threat to treating it as a legitimate asset class worthy of defined tax treatment 10.

3️⃣ South Korea’s “strict but supportive” approach offers a distinct regulatory model

South Korea has developed a unique regulatory approach that combines rigorous oversight with deliberate support for innovation, creating a distinctive national model for crypto governance.

While imposing stringent requirements on exchanges, including harsh penalties for serious violations, authorities are simultaneously developing frameworks for corporate crypto accounts to increase business participation 211.

The Financial Services Commission and Bank of Korea are taking active roles in creating specialized regulations for different crypto segments, with particular attention to stablecoins and irregular trading practices 115.

This balanced approach stands in contrast to more prohibitive regulatory environments in some countries and more laissez-faire approaches in others, potentially positioning South Korea as a reference point for effective crypto regulation.

The Virtual Asset Phase 2 Act exemplifies this balance, establishing detailed guidelines for digital asset issuance and trading while collaborating with industry through the Virtual Asset Committee to streamline processes for businesses 11.

The country’s evolving framework addresses specific market needs, including guidelines for token listings, reserve requirements for stablecoins, and corporate participation, while maintaining core principles of investor protection 115.

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