Crypto Policy Takes Centre Stage in South Korea’s Election Campaign

• South Korean presidential candidates vow to amend laws to permit the spot crypto exchange-traded funds (ETFs) launch. 
• Democratic Party’s Lee Myung, who stands a good chance of winning the election, has pledged to create a stablecoin backed by the Korean Won.
  

South Korea is gearing up for its much-anticipated election on June 3rd to elect Yoon Suk Yeol’s successor. Fascinatingly, crypto has taken over the entire presidential campaign with candidates seeking to win over the 15 million crypto investors, who constitute 30% of the population.

Following the development, local media have disclosed that the Democratic Party’s Lee Jae-myung and People Power Party’s Kim Moon-soo have both pledged to establish a regulatory framework that would facilitate the launch of spot crypto Exchange Traded Funds (ETFs), as indicated in our recent news update. Meanwhile, the CEO of CryptoQuant, Ki Young Ju, has hinted that all three frontrunners are pro-crypto candidates.

All three major South Korean presidential candidates support Bitcoin ETFs and institutional investment. Currently, Bitcoin ETFs and institutional investments are banned in Korea. 100% volume comes from retail.

Currently, South Korean laws prohibit crypto ETFs. The law also has limited proposals, including granting institutional access to ETFs listed overseas. As highlighted in our recent blog post, the Bank of Korea (BoK) has explained that Bitcoin does not meet its national standard or that of the International Monetary Fund (IMF).

BoK also believes that volatility is another reason why it cannot adopt Bitcoin as a foreign reserve asset, as featured in our previous news story. Meanwhile, the Managing Partner at Renaissance Law Firm, Jung Soo-ho, has criticised the existing laws as overly cautious and lacking a clear legal foundation.

While these measures may be intended to protect investors, they essentially function as unwarranted regulatory overreach.

Lee Jae-Myung Hints at Pro-Crypto Policies

Speaking on this, Lee Jae-Myung highlighted that his administration would create a safe environment for digital assets to thrive. According to him, his system would enable young people to “work freely, grow their assets, and live without worry”. To him, the current system is a serious structural crisis and was created by the lack of opportunities in society.

Above all, he has also proposed to establish a stablecoin pegged to the Korean Won. On this, Lee believes that this initiative would ensure the retention of domestic wealth while reducing dependencies on foreign-backed digital currencies.

Chainalysis data has indicated that the country emerged as the Eastern Asian country with the largest crypto transaction value in 2023 and 2024. A study reviewed by CNF discloses that one in three wealthy South Koreans now invests in crypto.

Amidst the backdrop of this, South Korea has recently been reviewing its crypto position that has been in place over the past several years. As detailed in our recent report, the Financial Services Commission (FSC) has, for instance, lifted a seven-year crypto ban to enable companies listed on the country’s stock exchange to trade virtual assets.