South Korea Expands Cryptocurrency Initiatives and Strengthens Market Regulation

The South Korean government is launching a comprehensive reform of the cryptocurrency sector. In 2025, it plans to introduce spot cryptocurrency ETFs, implement regulatory rules for stablecoins, and tighten oversight of the commission policies of local crypto exchanges.

The Financial Services Commission (FSC) of South Korea has announced it is preparing the legislative foundation for launching spot cryptocurrency ETFs in the second half of 2025. According to Yonhap News Agency, the initiative was submitted to the Presidential Policy Planning Committee as a formal proposal.

The FSC intends to build a full-fledged framework for issuing exchange-traded funds based on digital assets, including spot BTC instruments — covering legal foundations and infrastructure for setup, custody, management, and valuation. Investor protection will be a key focus. The document notes that crypto ETFs will provide an institutional channel for capital inflows and bring South Korea in line with developments in the United States, where such products were legalized in January 2024.

As part of the legislative update, South Korea will also establish a regulatory framework for stablecoins. This framework will include asset listing standards, disclosure rules, oversight of operator activities, and penalties for unfair practices.

According to Bank of Korea Governor Rhee Chang-yong, the government does not oppose issuing stablecoins pegged to the Korean won. At the same time, he voiced concerns about potential capital outflows and increased reliance on dollar-backed stablecoins. “Issuing won-based stablecoin could make it easier to exchange them with dollar stablecoin rather than working to reduce the use of dollar stablecoin. It would increase demand for dollar-denominated assets and complicate foreign exchange management,” Rhee stated.

According to local media reports, South Korean authorities aim to encourage reduced fees charged by crypto exchanges. As part of this initiative, current rates, calculation methods, and international benchmarks will be reviewed — a process that could lead to the introduction of recommended limits or even direct intervention. The Financial Services Commission also plans to implement a fee comparison system to encourage exchanges to lower their charges voluntarily. A large-scale commission audit is underway at Bithumb, Upbit, Coinone, and other platforms. The average trading fee on South Korean exchanges is around 0.05%, while the government’s desired level is 0.015%.

South Korea began preparing its regulatory framework for the cryptocurrency market in 2022. However, clear rules had yet to be finalized. In 2024, local regulators tightened control over crypto exchanges, enhanced oversight of stablecoin operations, and developed specific regulations for cross-border cryptocurrency transactions.