Presidential frontrunner in South Korea proposes stablecoin backed by local currency
South Korea Embraces Crypto ETFs: A Steps Towards Regulated Digital Asset Investment
South Korea is making significant strides in the world of cryptocurrency, with a focus on legalizing and adopting spot cryptocurrency exchange-traded funds (ETFs) by the end of 2025. This regulatory shift, which marks a departure from a previous ban, aligns South Korea's stance with that of the U.S. and Europe.
The Financial Services Commission (FSC) has submitted a comprehensive plan to the Presidential Committee on Policy Planning, outlining the roadmap for spot crypto ETFs, custody systems, pricing mechanisms, and investor protection rules. The plan also includes the development of a won-pegged stablecoin market.
Presidential candidate Lee Jae-myung, who is reportedly aiming to implement an integrated monitoring framework to make cryptocurrency markets more transparent and accessible, supports this initiative. He has pledged to legalize crypto ETFs and reduce trading fees, signaling strong political backing for the reform.
The FSC roadmap aims to launch spot crypto ETFs and won-pegged stablecoins by the end of 2025, with a focus on creating a secure and regulated market environment. Although the detailed implementation plan remains partially undisclosed, it includes strict investor protection and plans to create the necessary technical infrastructure to trade these ETFs on Korean exchanges.
Challenges remain, such as the high volume of required legal amendments (over 900) and some uncertainties about the FSC’s role due to possible government restructuring. While the ruling party supports the initiative, rapid legislative progress is uncertain. Taxation issues related to virtual asset ETFs also remain undecided, with profits from virtual assets currently untaxed, while ETFs face a withholding tax, which may affect investor enthusiasm.
Previously, the FSC blocked attempts by asset managers to launch Bitcoin ETFs citing regulatory concerns. However, the current political leadership’s stance has reversed this course toward legalization and approval.
If approved, the introduction of crypto ETFs would enable retail investors to gain exposure to digital assets through regulated channels. The proposed changes could potentially attract more institutional investment in the South Korean digital asset market, making it more appealing to investors. The development of a won-backed stablecoin market is also seen as a strategic measure to curb capital outflows and strengthen the domestic digital finance ecosystem.
In summary, South Korea is on track to establish a regulatory framework for spot cryptocurrency ETFs with an anticipated launch by late 2025, supported by clear government policy shifts. The support from both presidential candidates increases the chances of regulatory progress in South Korea's crypto landscape.
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