Source: Cointelegraph
Original: “South Korea Tightens Crypto Rules Ahead of Institutional Market Entry”
As South Korea prepares to allow institutional investors into its cryptocurrency market, the country is tightening regulations on digital asset trading, introducing new guidelines for non-profit cryptocurrency sales and stricter listing standards for exchanges.
On May 20, the Financial Services Commission (FSC) of South Korea announced a series of comprehensive new regulatory measures during the fourth virtual asset committee meeting.
These regulations, which will take effect in June, allow non-profit organizations and virtual asset exchanges to sell cryptocurrencies, provided they comply with the new compliance standards.
Non-profit entities must have at least five years of audited financial history to be permitted to receive and sell virtual asset donations. Additionally, these organizations are required to establish an internal donation review committee responsible for assessing the appropriateness of each donation and the liquidation strategy.
To reduce the risk of money laundering, all donations must be made through verified Korean won exchange accounts, with the verification responsibility shared among banks, exchanges, and non-profit organizations.
Furthermore, only cryptocurrencies listed on at least three major domestic exchanges will be eligible for receipt, and they must be liquidated immediately upon receiving donations.
Guidelines for non-profit organizations selling cryptocurrency donations. Source: FSC
Cryptocurrency exchanges will be allowed to liquidate fees paid by users in cryptocurrency, but only to cover operational costs. Sales will be subject to a daily limit, typically not exceeding 10% of the planned total.
Additionally, sales will be limited to the top 20 cryptocurrencies by market capitalization on five Korean won-based exchanges. Notably, to prevent conflicts of interest, exchanges are prohibited from selling tokens on their own platforms.
South Korea is also raising the standards for digital asset listings. The revised rules aim to curb market volatility caused by sudden price spikes by requiring tokens to meet minimum circulating supply before listing and temporarily restricting market order trading after listing.
So-called "zombie tokens" (those with low trading volume and weak market capitalization) and meme coins lacking clear utility will face stricter scrutiny. For instance, if a token fails to meet liquidity benchmarks or community engagement thresholds, exchanges must delist it.
Starting in June, exchanges and non-profit organizations can apply for real-name accounts to facilitate these sales activities. Later this year, the FSC plans to extend real-name accounts to listed companies and professional investors.
Cointelegraph has contacted the Korea Digital Asset Exchange Association for comments but has not received a response as of publication.
Lee Jae-myung, leader of the Democratic Party of Korea, has proposed issuing a stablecoin pegged to the Korean won, aimed at curbing capital outflows and enhancing the country's financial autonomy.
At a recent policy forum, Lee stated that a won-based stablecoin would help retain domestic wealth and reduce reliance on foreign-backed digital currencies like Tether (USDT) and USDC.
This initiative is part of Lee's broader digital asset reform plan, which also includes pushing for the legalization of spot cryptocurrency exchange-traded funds (ETFs).
Meanwhile, Kim Moon-soo, a rival from the ruling People Power Party, has also expressed support for introducing spot cryptocurrency ETFs, indicating that this issue has formed a bipartisan consensus.
Related: Senate Stablecoin Bill Vote Sparks Division Within Democratic Party, Anti-Corruption Concerns Become Controversial Focus
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