South Korea's government pushed back against speculation about banning cryptocurrency trading, moving to address concerns raised by Prime Minister Lee Nak-Yeon about the sector's explosive growth. Le
South Korea's government pushed back against speculation about banning cryptocurrency trading, moving to address concerns raised by Prime Minister Lee Nak-Yeon about the sector's explosive growth.
Lee had flagged the expansion as problematic, pointing to students trading full-time and a surge of retail investors lacking professional credentials. On December 13, the government convened an emergency meeting with the central bank and financial authorities to assess the market. The next day, it announced four regulatory measures.
The new rules target four areas. Minors and foreign nationals cannot trade cryptocurrencies. Institutional investors face a temporary ban from entering the market. Exchanges must comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) standards. Each individual can maintain only one trading account.
Three exchanges dominate South Korea's crypto market: Bithumb, Korbit, and Coinone. All three have financial backing from major South Korean conglomerates and investment firms. Bithumb alone processes more daily trading volume than KOSDAQ, the country's primary stock exchange. When word of the regulations spread, the exchanges signaled approval.
"A right set of regulations will rather nurture the virtual currency market, and we would welcome that," Bithumb told Reuters.
The government plans to implement the rules in stages. Immediate enforcement will ensure the sector aligns with existing regulations. In the longer term, South Korea will adopt regulatory approaches pioneered by Japan and other established crypto markets.
A task force involving the Ministry of Strategy and Finance, Financial Services Commission, Ministry of Justice, Fair Trade Commission, and Financial Supervisory Commission will develop more detailed rules over the coming months. The effort aims to protect investors while allowing the industry to expand.
A task force official told Chosun, a major finance publication: "The South Korean government has no other choice but to follow the regulatory frameworks and trends established by other leading governments. While there certainly exists a negative reputation attached to the cryptocurrencies, the government's stance is to allow what has to be allowed, for the benefit of the South Korean market."
