Local crypto exchanges and banks in South Korea are being required to enhance their know-your-customer (KYC) protocols for newly onboarded institutional clients, as the nation begins to ease its restrictions on institutional investment in cryptocurrencies.
Beginning in June, the sale of cryptocurrency in South Korea will be permitted for specific registered crypto exchanges and designated non-profit organizations. Crypto received through donations will be allowed to be sold by non-profits, while exchanges will be authorized to liquidate user fees collected in cryptocurrency.
In a press release issued on Tuesday, it was stated by the Financial Services Commission (FSC), South Korea’s primary financial regulatory authority, that crypto exchanges and their affiliated banks are required to thoroughly verify and investigate both the origin of funds and the intended purpose of transactions for new institutional clients.
It was noted by the FSC that the implementation of stricter KYC measures is intended to safeguard the domestic crypto and financial markets from the risks associated with money laundering. To support this objective, it was further stipulated by the regulator that institutions, along with their chief executive officers, must be monitored for any activities potentially linked to money laundering.
Such instructions are expected to be distributed to exchanges and banks later this month by the Korea Federation of Banks and the Digital Asset Exchange Association (DAXA).
It was added by the FSC that measures permitting publicly listed companies and entities designated as professional investors to engage in trading on cryptocurrency exchanges are planned to be announced by the government in the second half of 2025, accompanied by additional anti-money laundering requirements.
One in Five South Koreans Engages in Crypto Trading
One of the world’s largest spot cryptocurrency markets is located in South Korea, where local retail investors are recognized for their strong emphasis on altcoin trading.
According to the most recent data provided by the FSC, approximately 9.7 million users were registered on cryptocurrency exchanges in South Korea by the end of last year, representing nearly 20% of the nation’s overall population.
In the latter half of 2024, a daily average cryptocurrency trading volume of $5.26 billion was recorded in South Korea, while the total market capitalization of the local crypto sector was reported to have increased by 91% during that period, reaching $77.6 billion, according to the data.
In the lead-up to the presidential election scheduled for June, cryptocurrency has emerged as a central issue in South Korea, with both major candidates expressing support for the reversal of the existing ban on spot cryptocurrency exchange-traded funds.
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