South Korean regulators restrict local firms’ holdings in crypto stocks

The Korea Herald reported that the FSS made such verbal recommendations to several firms in early July. The move has caused some discontent among investment firms, who say the new restrictions create an uneven playing field because retail investors can still buy U.S. ETFs that include crypto assets.

Last year, the Foreign Exchange Transactions Act was amended to introduce an official definition of virtual assets and oblige crypto exchanges to provide information on transactions to regulators. In June 2025, with the support of the Democratic Party and the new president of the country, a bill was introduced aimed at legalizing the issuance of stablecoins, which should contribute to the development of the crypto market. In addition, eight of the largest banks in South Korea have begun to create a stablecoin based on the national currency, the won.

In July, the Ministry of Small and Medium Enterprises and Startups proposed tax incentives for crypto venture companies, which can help develop the innovative sector in the country.

Thus, despite the restrictions imposed by the FSS on financial institutions, South Korea continues to look for ways to support and develop the crypto industry, while strengthening control and regulating the risks associated with virtual assets.

This set of measures reflects the desire of the South Korean authorities to balance the security of the financial system and the stimulation of new technologies, ensuring the protection of investors and support for tech startups.