South Korea is tightening the regulation of digital assets ahead of institutional players entering the cryptocurrency market. New compliance standards are set for nonprofits and exchanges.
New Rules for Nonprofits
On May 20, the Financial Services Commission of South Korea announced a new set of measures to take effect in June. Nonprofit organizations will now be allowed to receive and sell cryptocurrency donations but must have at least five years of audited financial history. Additionally, they need to establish internal Donation Review Committees to evaluate donations and liquidation strategies.
To mitigate money laundering risks, all donations must go through verified Korean won accounts, with banks, exchanges, and nonprofits all responsible for verification.
Restrictions for Exchanges
Crypto exchanges will be allowed to liquidate user fees paid in crypto, but only to cover operational costs, capped at 10% of the total planned amount. Liquidation will only be permitted for the top 20 tokens by market cap across five exchanges, and exchanges are barred from selling tokens on their own platforms to avoid conflicts of interest.
Political Support for Cryptocurrency
Democratic Party leader Lee Jae-myung has proposed launching a stablecoin pegged to the Korean won to retain domestic wealth. His rival, Kim Moon-soo from the ruling People Power Party, has also expressed support for legalizing crypto ETFs, indicating bipartisan momentum on the issue.
The regulatory measures in South Korea aim to reduce risks and increase transparency in the digital asset market. Concurrently, there is growing political support for initiatives to reform digital asset regulations.
