The South Korean election may trigger four major changes in the global Crypto Assets market

South Korea is set to hold a presidential election on June 3rd. While this may seem like a local political event, its impact will extend far beyond borders due to South Korea's significant position in the global Crypto Assets market.

As the third largest Crypto Assets market in the world, after the United States and China, South Korea has a daily trading volume of $5.4 billion and 9.7 million active users. It has become a key benchmark for global projects entering Asia.

Key issues in this election include Crypto Assets taxation, regulation of the Korean won stablecoin, and the approval of the Crypto Assets ETF. These policy changes will not only affect domestic stakeholders, but global investors and project operators must also closely monitor the election results and the potential regulatory changes that may arise.

1. Crypto Assets tax policy may be implemented ahead of schedule

Currently, the taxation of virtual assets in South Korea has been postponed until 2027. However, as corporate entities are gradually permitted to enter the Crypto Assets market, a comprehensive reform of the tax framework has become inevitable.

The new government is likely to seek the abolition of the current extension policy and implement taxation earlier. This could lead to a significant decrease in trading volume for domestic exchanges, with the decline potentially exceeding 20%, referencing international precedents. At the same time, some funds may shift to offshore platforms.

2. Crypto Assets ETF is expected to be approved

All major candidates have expressed support for the introduction of a Bitcoin spot ETF, making it one of the policies most likely to be rapidly advanced after the election.

The launch of the ETF will compete with existing exchanges in terms of fees, potentially lowering the investment threshold and increasing market accessibility. In the long run, it could become a catalyst for further financial innovation, paving the way for new products that integrate Crypto Assets with traditional finance.

3. The "One Exchange One Bank" model may be adjusted

Currently, South Korea implements the "One Exchange, One Bank" principle, where each licensed Crypto Assets exchange can only cooperate with one commercial bank. However, this model is facing a reevaluation.

Some political parties have expressed support for shifting to a "one exchange, multiple banks" model. Allowing multiple banks to cooperate may enhance competition and bring users lower fees and more innovative services. However, regulatory agencies remain cautious, and any changes may require long-term deliberation.

4. The regulatory framework for the Korean Won stablecoin may be established

Although South Korea has previously focused more on the development of central bank digital currency ( CBDC ), domestic demand for the won stablecoin is growing. Several candidates have expressed their views on this, indicating support for the policy direction.

However, the proposal for the Korean won stablecoin is still in the conceptual stage. Any substantial progress will require the establishment of a comprehensive legal and regulatory framework, involving various aspects such as the qualifications of issuers, collateral transparency, and anti-money laundering measures. Therefore, the development of this policy is expected to advance in a phased medium to long-term manner.

Conclusion

Although these policy shifts are significant for the Crypto Assets industry, they are unlikely to be fully realized in the short term. Regulatory changes are expected to progress gradually and may be discussed in parallel with other more pressing policy issues.

However, the direction of change has become clear. Investors and market participants should prepare for an increasingly regulated and compliant policy environment. In particular, the final implementation of taxation on Crypto Assets is inevitable, and legislative discussions surrounding the issuance of security tokens (STO) are also expected to resume. Stakeholders need to closely monitor these policy trends and adjust their strategies in a timely manner.