In the interim presidential election in South Korea, cryptocurrency has become a decisive issue, with candidates vying for the support of a growing cross-generational group of digital asset investors.
The three leading candidates have all introduced cryptocurrency-friendly proposals. These proposals include the legalization of Bitcoin (BTC) spot exchange-traded funds (ETFs) and the easing of banking regulations, which currently limit fiat-to-cryptocurrency trading to just five platforms.
The vote on June 3 is expected to be held about two years early, triggered by the impeachment of former President Yoon Suk-yeol following his controversial declaration of a state of emergency at the end of 2024. Although lawmakers quickly overturned the state of emergency, this sudden power grab led to a political crisis that ultimately resulted in his removal.
Yoon Suk-yeol's 2022 campaign heavily relied on promises to reform cryptocurrency regulation, primarily targeting young voters. This time, as the older generation begins to invest significant wealth in digital assets, political attention to digital assets is only expected to intensify.
There are three main candidates in this election, all of whom have pledged to advance the local cryptocurrency economy.
Lee Jae-myung of the opposition Democratic Party lost to Yoon Suk-yeol in the last election but returns this time with a second cryptocurrency-friendly campaign.
Kim Moon-soo represents the ruling People Power Party (PPP). Former President Yoon Suk-yeol distanced himself from the People Power Party before the election, allowing Kim Moon-soo to set a new direction for the divided conservative base.
Lee Jun-seok was the youngest leader in the history of the People Power Party. He now leads his newly established Reform Party, a small party he formed after splitting from the ruling coalition in January 2024.
Park Sung-jun, director of the Blockchain Research Center at Dongguk University, told Cointelegraph: "The political field is actively positioning [cryptocurrency] as a key campaign agenda."
"Driven by the transition to a digital economy, the push for political funding transparency, the dissemination of blockchain political participation technology, and the growing demand for investor protection, [cryptocurrency] has become an important economic, social, and political issue in South Korea."
Both Lee Jae-myung and Kim Moon-soo have promised to ease strict banking regulations that require cryptocurrency exchanges to partner with licensed banks to provide fiat services—this system has created an almost monopolistic situation with only five approved platforms. The existing structure excludes corporate participation as it requires users to open accounts at partner banks using their legal identities.
Lee Jae-myung also proposed the introduction of a stablecoin pegged to the Korean won to reduce reliance on overseas-issued tokens.
Lee Jun-seok opposed this, pointing out that South Korea once had an algorithmic stablecoin pegged to the won, TerraKRW (KRT), which was part of the Terra ecosystem that suffered a collapse of billions of dollars.
"Lee Jae-myung proposes to launch another stablecoin without any safeguards. What assets will back it? How will market risks be handled? How do we avoid repeating past failures? There are no answers," Lee Jun-seok said in a Facebook post, criticizing his opponent for turning stablecoins into a "slogan."
The two candidates clashed again over stablecoins during a live debate, with Lee Jae-myung defending the safety of centralized and fiat-backed stablecoins.
Lee Jae-myung was Yoon Suk-yeol's opponent in the 2022 election, at which time he also supported cryptocurrency-friendly policies. However, he was not as radical as Yoon Suk-yeol, who made several commitments to support cryptocurrency. Some of these commitments, such as lifting the ban on play-to-earn (P2E) games and initial coin offerings, were never implemented.
Reports indicate that Lee Jun-seok referred to gaming as South Korea's "second semiconductor industry," with the gaming industry accounting for over one-fifth of the country's total exports in 2024. He promised to target a 10% share of the global gaming market through regulatory support in taxation, exports, and talent development. He added that neglecting the regulation of blockchain-based P2E games has accelerated the outflow of the creative industry.
P2E games remain banned under local regulations, but investor interest has surged recently following the launch of new games by one of South Korea's largest game developers, Nexon, along with new cryptocurrencies related to its in-game economy.
According to data from the Financial Intelligence Unit (FIU), by the end of 2024, South Korea had 9.7 million cryptocurrency investors verified through Know Your Customer (KYC), a 25% increase from the first half of the year. The largest growth was among investors in their 30s, with a 29% increase, followed by those in their 40s (27%), and those over 50 saw a 25% increase.
FIU's survey results show that older investors hold more assets. By the end of the year, 221,000 investors held at least 100 million won (approximately $73,000) in cryptocurrency. Among them, 172,500—78%—were over 40 years old.
In February, the head of the Financial Industry Association urged regulators to approve Bitcoin and Ethereum ETFs, citing the growing demand from older investors. He argued that ETFs provide a safer exposure than direct investments.
The approval of Bitcoin ETFs has been a key campaign promise for both Lee Jae-myung and Kim Moon-soo. This move comes after a growing global momentum, with the United States, the world's largest market and a key trading partner for South Korea, giving the green light for spot Bitcoin ETFs in early 2024.
"Cryptocurrency plays a certain role in our society, but ultimately, it is one of the global trends. With the U.S. leading, we are following in its footsteps. It's a bit disappointing—we could have taken the lead ourselves," said Zhao Jae-yu, an assistant professor of social sciences at Hankuk University, to Cointelegraph.
However, the country's Capital Markets Act is a barrier, as it does not recognize cryptocurrencies as eligible underlying assets for ETFs. The Financial Services Commission (FSC) is also reviewing the legal pathways to allow Bitcoin ETFs under its dedicated cryptocurrency committee.
Yoon Suk-yeol's failed coup accelerated the presidential election and brought new urgency to unresolved issues in the local cryptocurrency industry.
"In the 2022 presidential election, cryptocurrency was seen as speculative and untrustworthy. But by the time of the 2025 election, it has become a key policy issue, with major candidates pushing for institutionalization and financial productization in response to the investment realities faced by young people," said Park Sung-jun from the Blockchain Research Center.
South Korea is one of the largest cryptocurrency markets in the world. In the first quarter of 2024, the won ranked highest in fiat-to-cryptocurrency trading, primarily driven by retail investors. Institutional participants are still on the sidelines, waiting for the FSC to prepare to launch pilot trading for professional investors.
Cryptocurrency policy was once seen as a campaign strategy to influence young voters, but this year, it is viewed as an economic and social issue affecting multiple generations. In this election, the older generation is entering the digital realm, accelerating calls for regulated investment tools like ETFs.
"The situation has changed significantly. There were even Q&A sessions about virtual assets in the presidential debates, and related discussions seem to be more active. In the past, people viewed it with skepticism, but now it feels like the public is approaching it more neutrally and making their own judgments," Zhao Jae-yu said.
According to a local media survey, Lee Jae-myung and Kim Moon-soo are the two leading candidates, with Lee Jae-myung leading Kim Moon-soo 44.9% to 35.9% in a survey conducted from May 23 to 25. Lee Jun-seok trails far behind with a support rate of 9.6%, although he has grown nearly 3% from a preliminary survey conducted a week earlier.
The 21st presidential election is scheduled for June 3.
Related: Bitcoin (BTC) supporters hit back at Australian senator's "You can't eat Bitcoin" remarks
Original article: “Veteran capital in the cryptocurrency field is influencing the South Korean election”
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