Major political parties in South Korea are offering incentives related to cryptocurrencies to secure support from voters ahead of the upcoming parliamentary elections.

As reported by Bloomberg on April 5, the opposition Democratic Party has promised to eliminate restrictions on exchange-traded funds (ETFs) holding crypto directly, including US Bitcoin ETFs. After the approval of Bitcoin ETFs in January, the securities regulator in South Korea cautioned that distributing these ETFs locally could breach national laws.

Democratic Party representative Hwanseok Choi stated to Bloomberg that they plan to permit ETFs, whether they are domestic or foreign, in line with the party's manifesto.

In an effort to attract crypto-oriented voters, the People Power Party, led by President Yoon Suk Yeol, committed to postponing taxes on profits from digital assets, which were set to be implemented in 2025.

Government data reveals that nearly six million South Koreans engaged in crypto trading through registered exchanges in the first half of 2023, accounting for 10% of the country's population. Official disclosures indicate that 7% of election candidates possess cryptocurrencies.

The Korea Securities Depository disclosed that crypto users have invested more than $200 million in shares of the US-listed company MicroStrategy (MRST), known for its substantial exposure to Bitcoin, leading some experts to consider it as similar to a leveraged Bitcoin ETF.

Despite the pledges made by politicians, South Koreans are preparing for stricter regulations on crypto assets. Local financial authorities are planning to introduce new regulations for token listings on centralized exchanges in the near future.

Reports in local media suggest that domestic exchanges will be forbidden from listing digital assets involved in hacking incidents until the root causes are identified. Moreover, foreign digital assets will be listed on domestic exchanges only if there is a white paper or technical manual accessible to local investors.

In addition, South Korea's upcoming Virtual Asset Users Protection Act prohibits the use of undisclosed important information about crypto, market manipulation, and illegal trading. The crypto law is set to go into effect on July 19, 2024. In February, the government issued a revised version of the Act, enforcing significant fines and criminal penalties for violations, including imprisonment terms of over one year or fines ranging from three to five times the amount of illegal gains.