South Korea Tightens Rules Around Digital Asset Transactions as It Prepares to Allow Institutional Players

South Korea is tightening rules around digital asset transactions as it prepares to allow institutional players into its crypto market

South Korea's Financial Services Commission (FSC) is tightening rules around digital asset transactions as it prepares to allow institutional players into its crypto market.

During its fourth Virtual Asset Committee meeting on May 20, the FSC finalized new guidelines for nonprofit crypto sales and stricter listing standards for exchanges, set to take effect in June.

Nonprofit organizations will be able to receive and sell virtual asset donations, but only if they have at least five years of audited financial history and establish internal Donation Review Committees to assess each donation and the liquidation strategy.

To reduce risks of money laundering, all donations must be routed through verified Korean (KWT) exchange accounts, with verification responsibilities placed on banks, exchanges and the nonprofits themselves.

Only cryptocurrencies listed on at least three major domestic exchanges will be permitted, and liquidation is expected to occur immediately upon receipt.

The updated regulations also restrict crypto exchanges from using user fees paid in crypto to cover operational costs, with sales subject to daily limits and limited to the top 20 tokens by market cap across five KWT exchanges.

Furthermore, exchanges will be barred from selling tokens on their own platforms to prevent conflicts of interest.

The revisions to the listing standards aim to curb instability from sudden price spikes by requiring a minimum circulating supply before a token is allowed to trade and temporarily restricting market orders post-listing.

So-called zombie tokens (with low volume and thin market caps) and memecoins without clear utility will face more scrutiny. For instance, exchanges must delist tokens if they fail to meet liquidity benchmarks or community engagement thresholds.

Starting in June, exchanges and nonprofits can apply for real-name accounts to facilitate these sales. Later this year, the FSC plans to extend real-name accounts to listed firms and professional investors.

Cointelegraph contacted Korea's Digital Asset eXchange Association for comment.

Earlier this year, South Korea's Democratic Party leader Lee Jae-myung proposed launching a stablecoin pegged to the Korean won.

Speaking at a recent policy forum, Lee said a KWT-based stablecoin could help retain domestic wealth and reduce dependence on foreign-backed digital currencies such as Tether (USDT) and Circle (USDC).

The initiative is part of Lee's broader push for digital asset reforms, which includes legalizing spot crypto exchange-traded funds (ETFs).

His rival, Kim Moon-soo of the ruling People Power Party, has also expressed support for introducing spot crypto ETFs, signaling bipartisan momentum on the issue.