Institutional Crypto Adoption Accelerates in South Korea as Ban Is Lifted

South Korea is preparing to take a major step toward institutionalizing its digital asset market, with regulators set to lift a long-standing ban on corporate crypto investment, while industry players simultaneously push back against proposed ownership restrictions on exchanges.

According to local media reports, the Financial Services Commission (FSC) is finalizing new guidelines that would allow listed companies and professional investors to allocate up to 5% of their equity capital to digital assets. The move would mark the end of a ban introduced in 2017, when authorities restricted institutional participation amid concerns over money laundering and market instability.

A senior official cited in the reports said the final guidelines are expected to be released in January or February, opening the door for legal entities to engage in crypto transactions for investment and financial purposes. Under the proposed framework, corporate investments would be limited to the top 20 cryptocurrencies by market capitalization and conducted exclusively through South Korea’s five largest regulated exchanges.

The status of dollar-pegged stablecoins, including Tether’s USDT, remains under discussion. Regulators are also considering how such assets would fit into the broader framework, particularly as the government advances parallel plans around stablecoin regulation.

The policy shift could unlock substantial capital flows into the domestic crypto market. Analysts note that large corporations with significant balance sheets could, in theory, deploy tens of trillions of won into digital assets under the new limits. The move is also expected to accelerate discussions around spot Bitcoin exchange-traded funds and the launch of a national stablecoin, both of which remain under regulatory review.

At the same time, South Korea’s digital asset industry is voicing concern over a separate regulatory proposal that could reshape exchange ownership structures. The Digital Asset eXchange Alliance (DAXA), which represents the country’s five major crypto exchanges, Upbit, Bithumb, Korbit, Coinone, and Gopax, has issued a formal objection to government plans to cap ownership stakes held by major shareholders.

The FSC has reportedly floated limits ranging from 15% to 20% for large shareholders in digital asset platforms, citing governance risks associated with ownership concentration. DAXA warned that applying such caps, particularly to existing companies, could undermine investor confidence, disrupt established ownership structures, and slow the sector’s growth.

In a statement, the alliance argued that digital assets operate in a global, borderless market and that weakening domestic platforms could push users and capital toward overseas exchanges. It also emphasized that major shareholders play a critical role beyond capital provision, bearing ultimate responsibility for safeguarding user assets and overseeing operational integrity.

DAXA cautioned that artificially redistributing ownership could dilute accountability and weaken user protection, while creating regulatory uncertainty that discourages entrepreneurship and long-term investment. The group called on regulators to align new rules with international standards and market principles, rather than introducing measures that could destabilize property rights.

Both developments are unfolding as South Korea prepares its second comprehensive digital asset law, expected to be finalized in the first quarter of this year. The legislation aims to formalize key initiatives launched in 2025, including won-backed stablecoins and the country’s first spot crypto ETFs.

The regulatory push comes amid broader structural shifts in the local crypto industry. In recent months, Upbit confirmed plans to merge with Naver Financial, while reports suggest Mirae Asset Group is in talks to acquire Korbit, signaling deeper involvement from traditional financial institutions.

Together, the proposed reforms reflect a delicate balancing act. South Korea is moving to bring corporate capital and institutional legitimacy into crypto markets, while grappling with how to regulate ownership, governance, and systemic risk in an industry that is becoming increasingly intertwined with the traditional financial system.