Korea’s crypto regulation rests on a pre-regulatory framework that has persisted since the IMF crisis and the global financial crisis, and this approach has been extended to the Web3 sector. Over the past decade, regulation has focused on investor protection through the Special Financial Transaction Act (2021) and the Investor Protection Act (2024), and the recently passed STO amendment signals limited incorporation into the formal regime. Four core debates are underway: spot ETFs, won-denominated stablecoins, crypto taxation, and exchange ownership caps, with the government signaling ongoing consideration of spot ETFs as part of its growth strategy.
The government faces a clash between the Financial Services Commission’s openness to fintech participation and the Bank of Korea’s push for a bank consortium on stablecoins. Personal crypto trading taxes, postponed for years, are expected to be implemented in 2027, and the debate over exchange major-ownership limits continues with industry opposition. The report notes that exchanges have been confined to trading intermediaries, limiting expansion into custody, brokerage, and ICO platforms.
Unlike Coinbase, which has evolved into a comprehensive crypto financial platform, Upbit remains an exchange and has not generated spillovers for Korea’s domestic ecosystem. Overall, Korea’s regulation has prevented accidents but fallen short of fostering industrial growth, underscoring the need for policy reform that balances investor protection with industry innovation through closer regulator–industry dialogue.
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