South Korea May Soon Take a Significant Step Towards Modernizing Its Digital Asset Environment

The People Power Party (Triple S) has begun making moves to amend cryptocurrency laws in South Korea. A recent meeting saw seven key initiatives being proposed for upgrading the country’s digital currency system.

The meeting, which took place on April 28 at the National Assembly, saw lawmakers discussing several pressing matters in the field of cryptocurrency. Among the key changes planned are the potential approval of exchange-traded funds (ETFs) for spot Bitcoin later in 2023.

One critical amendment on the agenda is the removal of the requirement for crypto exchanges to have only one banking partnership for their operations.

Currently, each crypto exchange must maintain a limited banking partnership to open real-name verified accounts, according to the existing "law on reporting and use of customer financial information." This measure, intended to combat financial crime, has faced criticism for limiting user convenience and stifling market competition.

"Due to the single bank partnership, there are limited exchanges operating in Korea, and they are able to monopolize the market," said lawmaker Park Soo-min of the Triple S. "If this rule is removed, it will create more possibilities for market competition and increase the operational efficiency of the digital asset industry."

In addition, the Triple S is putting effort into removing market entry barriers to allow more participants to enter the space. The government will authorize non-profit organizations and large-scale corporations to start trading virtual assets in the second quarter of 2025.

The sector reforms will see the entry of 3,500 institutions, including 2,500 publicly listed companies and 1,000 investment firms, by the end of this year.

The party’s reform plan also includes the introduction of spot Bitcoin ETFs as one of its main priorities. These financial products will acquire and hold Bitcoin and Ethereum, with their market values reflecting the price movements of the underlying digital currencies.

Having observed the high trading volumes of Bitcoin spot ETFs in the U.S., Hong Kong, and the U.K., Korean lawmakers believe that the time is now to act on these types of products.

“One Bitcoin ETF approved by the U.S. earlier in January generated billions of new trading volume on its first day of trading. The strong investor demand means that Korea shouldn’t delay in launching these products,” added Rep. Park.

The party is also working to introduce additional reforms in parallel with the previously mentioned initiatives.

The Triple S wishes to pass three main pieces of legislation: first, to establish regulations for stablecoins; second, to create a basic digital asset law; and third, to introduce new laws on tokenized securities (STOs). The party is also working to introduce a new taxation structure that will benefit smaller investors financially.

Finally, the Triple S hopes to secure international exchange users for South Korean platforms as they introduce financial security measures.

To manage and guide these changes, a special virtual assets committee will be formed under the leadership of the Triple S presidential candidate. The team will oversee the institutionalization of digital asset trading while promoting the sector’s progress and public trust in digital assets.