Key Takeaways
- South Korea’s Financial Services Commission (FSC) has unveiled a comprehensive roadmap for introducing spot crypto ETFs and regulating stablecoins later this year.
- The regulator will establish a robust technical infrastructure that covers investor protection, market transparency, and alignment with global standards in the cryptocurrency sector.
- The initiative reflects growing political momentum and regulatory interest in integrating cryptocurrency into mainstream financial markets.
South Korea’s financial regulator, the Financial Services Commission (FSC), has submitted proposals to introduce spot crypto ETFs and regulate stablecoins during the second half of 2025. The move marks a reversal of the country’s former restrictive policies as a new government takes office.
According to a report from local news outlet Yonhap, the roadmap filed with the Presidential Committee on Policy Planning outlines a range of implementation measures aimed at introducing spot crypto ETFs, in addition to creating an investor protection framework that will encompass custody, operation, and evaluation standards. The initiative also aims to regulate Korean Won-backed stablecoins by the second half of 2025.
Move Also Aligns With Campaign Promises
The FSC stated that the measures would be crucial in creating a secure and transparent environment that encourages individual and institutional participation in the local cryptocurrency market. The move also aligns with the campaign promises made by President Lee Jae-myung earlier, who pledged to remove the ban on domestic crypto ETFs. According to the report made to the State Affairs Planning Committee:
“The plan takes into account risks related to the linkage of financial and virtual asset markets, the impact on the real economy, and investor benefits.”
Support Regulated Spot Crypto ETFs
The FSC had previously blocked the issuance and trading of cryptocurrency exchange-traded funds (ETFs), citing risks to the country’s financial stability and the nature of crypto assets. According to the agency, then, cryptocurrencies were unstable and not suitable for traditional investment vehicles. Nonetheless, with a new administration in place, the position has since shifted, with the FSC now outlining measures to support regulated spot crypto ETFs. The regulator is now working to establish legal and regulatory systems that will help establish a stable market for such products.
Korean Won-Backed Stablecoin
Additionally, the policy draft by the FSC also contains provisions that would allow the introduction of a Korean Won-backed stablecoin. The national currency would fully back the proposed digital asset and be subject to regulatory oversight. According to President Lee, there was a need for a local stablecoin to prevent capital from leaving South Korea. Speaking during a policy discussion last May, he stated:
“We must build a won-based stablecoin market to keep investment within the country.”
According to the plans by FSC, the stablecoin regulatory framework will also be finalized later this year, as the regulator collaborates with other financial and technology agencies to draft the finer details on matters such as rules for issuance, management, and compliance of these assets.
Conclusion
South Korea’s SFC is charting a path that could integrate spot crypto ETFs and stablecoin regulation into the country’s financial system before the end of 2025. The newly presented roadmap highlights the new government’s dedication to modernizing the country’s cryptocurrency market by promoting enhanced transparency, investor protection, and rigorous enforcement. The move represents a vital step towards aligning South Korea’s crypto regulations with global standards and supporting a more resilient and inclusive market environment.
Frequently Asked Questions
What is an ETF in crypto?
A crypto exchange-traded fund (ETF) issues publicly traded securities that offer exposure to the price movements of bitcoin futures contracts.
What is the difference between crypto ETF and actual cryptocurrency?
When you own cryptocurrency directly, you hold the actual cryptocurrency, which can be stored in a secure digital wallet and used for transactions. When you buy a crypto ETF, you hold shares in a fund that tracks the price of the cryptocurrency, but you do not have ownership of the crypto itself.
What is a stablecoin, and how does it work?
A stablecoin is a digital asset that maintains a stable value against a pegged external traditional asset class. Stablecoin reduces price volatility by backing its value against a conventional asset.
