In 2025, South Korea faces political upheaval and increased oversight regarding cryptocurrencies. A delay in the capital gains tax on crypto was proposed until 2027, while state-sponsored cyber threats prompted warnings from the government. The FSC is gradually enabling corporate crypto trading and intensifying regulatory actions against crypto crime, all amidst growing adoption among South Koreans and declining trading volumes. Crypto will remain a key issue in the upcoming presidential election.
In early 2025, South Korea is navigating political tumult, regulatory scrutiny, and an evolving cryptocurrency landscape. Following the failed martial law attempt by former President Yoon Suk Yeol in December 2024, authorities have intensified oversight of the digital asset sector while deferring previously discussed tax initiatives.
Legislators have decided to delay the implementation of a 20% capital gains tax on cryptocurrency until 2027. This delay marks the third extension and reflects growing concerns regarding the economy and political stability. Key issues cited include enforcement difficulties and capital flight apprehensions due to the recent political climate.
The government, alongside the US and Japan, has issued warnings regarding state-sponsored cyber threats aimed at the cryptocurrency sector. Notably, the Lazarus Group has been linked to significant breaches, including assaults on WazirX and South Korea’s Upbit, highlighting multiple vulnerabilities within the system.
The Financial Services Commission (FSC) held its second Virtual Asset Committee meeting in January, but did not fully open corporate crypto trading. New safeguards were introduced to prevent price manipulation, and the agency committed to tighter monitoring of stablecoins while initiating enforcement actions under the Virtual Asset User Protection Act.
In February, the FSC announced a phased plan enabling corporate entities to trade crypto through real-name accounts. This initiative will start with charities and universities, facilitating their ability to transact with donated digital assets while complying with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.
Law enforcement has intensified actions against crypto crime, with the re-arrest of Park, a repeat offender involved in a fraudulent token scheme that reportedly amassed $48 million. The Financial Intelligence Unit (FIU) partially suspended operations against Upbit operator Dunamu due to compliance issues, prompting a legal challenge that allowed the exchange to proceed with user onboarding.
Momentum is building for spot Bitcoin exchange-traded funds (ETFs) as South Korean financial authorities consider legal pathways to permit these products. This comes amidst rising requests from local brokerages and follows similar approvals in the US.
Regulators have targeted unregistered foreign crypto exchanges, compiling a list of illicit platforms and urging app stores to remove their applications. Consequently, Google and Apple have removed several offending apps, with warnings issued against platforms operating without proper licensing.
By the end of the first quarter, the total number of crypto accounts in South Korea surpassed 16 million, exceeding a third of the population and surpassing domestic stock traders. Nonetheless, trading volumes have significantly declined, with Upbit’s quarterly volume plummeting by over 30% according to CoinGecko.
With a presidential election slated for June, cryptocurrency is poised to be a prominent issue in the campaign. Candidate Hong Joon-pyo has expressed intentions to align South Korea’s crypto regulations with those of the US, despite concerns regarding his understanding of central bank digital currencies (CBDCs).
For further insights into blockchain, industry leaders are set to participate in upcoming events such as Blockchain Expo in Amsterdam, California, and London.
