4-4-2025 – South Korea’s financial watchdog has unveiled plans to potentially welcome foreign investors into its domestic cryptocurrency sphere, marking a departure from its traditionally conservative stance on digital asset trading.
Speaking at a National Assembly gathering, Kim Sung-jin, who heads the Financial Services Commission’s (FSC) virtual asset division, outlined the regulator’s vision for international market participation, albeit with robust safeguards in place.
The proposed regulatory evolution hinges crucially on domestic exchanges bolstering their anti-money laundering (AML) protocols. Of particular importance is the comprehensive implementation of the ‘Travel Rule’, a mechanism requiring detailed documentation for digital asset transfers exceeding one million Korean won.
The current framework presents considerable hurdles for overseas participants, with regulations mandating Korean bank accounts linked to verified identities for cryptocurrency trading. This requirement has effectively cordoned off the market from international engagement, creating what industry observers term the ‘Kimchi Premium’ – a notable price disparity between Korean and international exchanges.
Peter Chung of Presto Research suggests that dismantling these barriers could catalyse significant market development, particularly in the realm of U.S. dollar-pegged stablecoins. The anticipated influx of global traders could potentially dissolve the price premium that has long characterised the Korean crypto landscape.
This potential liberalisation arrives against the backdrop of broader international cryptocurrency policy shifts, particularly influenced by American regulatory developments under the Trump administration. Seoul’s consideration of market opening reflects a broader recognition of evolving global digital asset paradigms.
However, the FSC maintains its emphasis on stringent market supervision. The regulator’s recent enforcement actions, including scrutiny of unauthorised foreign platform interactions, underscore its commitment to maintaining market integrity alongside potential liberalisation.
