South Korea Crypto Market Shake-Up: The Path to Attracting Foreign Investors
South Korea Crypto Market – South Korea’s top financial regulator, the Financial Services Commission (FSC), has suggested the possibility of allowing foreign investors to access the country’s cryptocurrency market, but only if local exchanges meet sufficient anti-money laundering (AML) standards. This announcement was made by Kim Sung-jin, the head of the virtual asset division at the FSC, during a recent seminar at the National Assembly.
Foreign Investment Potential in South Korea’s Crypto Market
Kim expressed his support for the direction of enabling foreign investors to trade on South Korean crypto exchanges. According to local reports, the FSC is exploring ways to attract global investors while ensuring that exchanges implement robust anti-money laundering systems. This move is seen as part of South Korea’s effort to keep up with the evolving global crypto landscape, especially as the U.S. leads crypto innovation under former President Trump’s administration.
Currently, foreign investors face restrictions in South Korea’s crypto market. Local laws mandate that exchanges adhere to strict know-your-customer (KYC) protocols, with users required to trade through bank accounts registered under their real names. Peter Chung, Head of Research at Presto Research, noted that these measures are designed to control portfolio investments and could be relaxed if South Korea decides to open its market to foreign traders.
Regulatory Shifts and the Travel Rule
South Korea is reconsidering its capital controls, which could lead to a more flexible approach to foreign crypto investment. The Kimchi Premium, a phenomenon where local crypto prices differ from global markets, could be eliminated as a result, bringing in more global liquidity.
However, AML compliance remains a critical issue. South Korea’s crypto exchanges still need to improve their capacity to handle AML duties effectively. In March 2022, the FSC introduced the Travel Rule, aligning with the Financial Action Task Force (FATF) recommendations, which requires exchanges to store and share information about large crypto transactions.
Upbit’s Recent AML Penalty
Earlier this year, South Korea’s Financial Intelligence Unit imposed a penalty on Upbit, the country’s largest cryptocurrency exchange, for allegedly facilitating transactions with unregistered foreign exchanges. However, a Seoul court recently halted the penalty following an injunction filed by Upbit.
As one of the world’s largest crypto markets, South Korea’s altcoin-heavy ecosystem continues to thrive, with Upbit alone reporting over $85 billion in monthly trade volume in March 2025.
This potential shift in policy could further reshape the global cryptocurrency industry and South Korea’s role within it.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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