- Nearly one-third of South Koreans hold digital assets, making crypto a vital issue in the upcoming presidential election.
- Both major parties support crypto exchange-traded funds (ETFs) but differ on approaches to stablecoins and banking regulations.
- New rules allowing non-profits and exchanges to sell digital assets will start in June, suggesting greater policy flexibility.
- The push for regulatory development follows past scandals such as the Terra stablecoin collapse.
- Candidates propose policies like launching won-backed stablecoins and easing banking rules for crypto firms.
South Korea will elect its next president on June 3, with digital assets emerging as a central campaign issue in a nation where nearly one in three citizens owns cryptocurrencies. Both leading candidates have prioritized crypto-related policies as part of their broader platforms in response to widespread digital asset adoption.
Lee Jae-myung from the Democratic Party and Kim Moon-soo from the People Power Party each back the introduction of crypto ETFs, according to public statements. They differ in other areas: Lee advocates for stablecoins backed by the Korean won, aiming to reduce capital outflow—estimated at $40.8 billion from local exchanges in the first quarter—while Kim plans to dismantle rules that restrict each crypto exchange to working with just one bank, as well as promising lower taxes for the middle class.
This election, Korean politics sees crypto as a narrative to gain voters’ favors, positioning it as another national growth engine besides AI and semiconductors, said Dr. Sangmin Seo of the Kaia DLT Foundation. He noted bipartisan agreement that South Korea should not fall behind global regulatory advances.
The Financial Services Commission (FSC) recently detailed new regulations to allow non-profits and exchanges to sell digital assets starting in June, signaling a shift towards broader participation in the sector (FSC official release). The Democratic Party also launched a Digital Asset Committee to create comprehensive regulations (more details).
Regulators, industry experts, and political leaders have focused on restoring trust after the collapse of the Terra stablecoin, which led to large consumer losses and negative views of Korea’s crypto market. Now, lawmakers are communicating with industry experts who have studied the first movers, such as the EU, Singapore, the US, and the UAE, to create the most applicable regulatory framework for the Korean market, and this includes the consumer protection measures, Seo explained.
Both parties have shown interest in enabling ETFs for crypto investments, inspired by recent launches in the U.S. Ryan Yoon from Tiger Research believes ETFs would be opened to most investors. KP Jang from Xangle noted that new won-backed stablecoins would be fully collateralized, holding actual reserves of the Korean currency to improve stability and minimize risks like those encountered with Terra.
Despite these moves, experts such as Yoon said South Korea does not yet have "official discussions or regulations to protect stablecoin users," and suggested that U.S. policies, like the GENIUS Act, could serve as a model in the future.
In summary, upcoming changes and policy proposals highlight the growing integration of digital asset regulation into South Korea’s political and financial systems, as leaders seek to address consumer protection and support market innovation.
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