South Korea to allow charities, universities, and crypto exchanges to sell digital assets

Source Cryptopolitan

South Korea’s leading financial regulator will permit charities, universities, and cryptocurrency exchanges to sell specific digital assets in the first half of the year, citing “growing demand” for institutional crypto trading.

This decision follows last month’s reported announcement by the Financial Services Commission, outlining a phased approach to allowing institutional investors to trade cryptocurrencies.

Under Vice Chairwoman Kim So-young’s chairmanship, the Financial Services Commission (FSC) held the third “Virtual Asset Committee” meeting today to discuss policies that can support corporate participation in cryptocurrency transactions.

South Korea grants institutions and privileges new crypto privileges

The FSC announced today that charities and universities will soon be permitted to sell cryptocurrency donations starting in the second quarter.

Additionally, the regulator plans to allow South Korean crypto exchanges to convert digital assets received as fees into cash to cover operating expenses, including payroll and taxes. The FSC said in a translated statement:

However, considering the potential for conflicts of interest with users arising from mass sales by exchanges, the plan is to gradually allow this after establishing a common ‘Sales Guideline’ among operators.

~ FSC

Under South Korea’s financial information regulations, only verified retail traders with official government-registered names can trade cryptocurrencies. The FSC has also directed banks to prevent institutions from opening accounts on exchanges.

The FSC said in its Thursday statement that there is a growing demand within the country to allow corporate transactions of virtual assets. The financial regulator noted that major countries abroad broadly allow corporate participation in the market.

In the latter half of the year, the financial regulator plans to initiate pilot tests, allowing approximately 3,500 listed firms and professional investment companies to open real-name accounts for investment purposes.

According to Yonhap news agency, the FSC has permitted law enforcement agencies to set up accounts to liquidate their crypto holdings seized from illicit activities since late last year.

South Korea eases crypto rules for corporations

Since 2017, South Korea has restricted corporate participation in the virtual asset market due to concerns about speculative trading and money laundering risks. However, with the Virtual Asset User Protection Act becoming effective in July 2024, South Korea has brought its regulations into conformity with the rest of the world. 

Increasing domestic corporate interest alongside international norms that now permit corporate crypto investments has sparked debates about policy reforms. 

As one of the world’s largest crypto markets, South Korea is home to Upbit, which ranked as the fourth-largest centralized exchange by monthly trading volume last month.

The FSC intends to work with major industry participants, including the Financial Supervisory Service, the Korea Federation of Banks, and the Digital Asset eXchange Alliance (DAXA), to develop internal guidelines and risk mitigation strategies. The effectiveness of the phased corporate participation model will be assessed on market conditions and against regulatory compliance.

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