South Korea Lifts Ban on Institutional Crypto Trading After Seven Years

South Korea Lifts Ban on Institutional Crypto Trading

South Korea's Financial Services Commission (FSC) has officially lifted the ban on institutional cryptocurrency trading, allowing corporations, investment funds, and non-profit organizations to open accounts on licensed domestic exchanges. The ban, which had been in place since 2017, restricted crypto trading accounts to individuals with real-name verified bank accounts.

The policy reversal is expected to unlock significant new capital flows into the Korean cryptocurrency market, which is already one of the world's most active retail markets. Industry estimates suggest that institutional participation could add $20-30 billion in trading volume to Korean exchanges within the first year of the policy change.

Regulatory Framework and Safeguards

The FSC has implemented several safeguards to manage the transition. Institutional investors must meet specific criteria including minimum capital requirements, demonstrated understanding of digital assets, and appointment of dedicated compliance officers. Investment limits are tied to the institution's total assets, with initial caps set at 5% of total assets under management.

Licensed exchanges including Upbit, Bithumb, Coinone, and Korbit will be required to implement enhanced monitoring systems for institutional accounts, including real-time reporting to the FSC and quarterly compliance audits. The exchanges have been given six months to upgrade their infrastructure before institutional accounts can be activated.

The decision has been welcomed by the Korean blockchain industry, which has long argued that the institutional ban was putting Korean companies at a competitive disadvantage compared to peers in Japan, Singapore, and Hong Kong.

Disclaimer: This article is for informational purposes only.