South Korea's major shift in cryptocurrency policy: allowing corporations to open real-name cryptocurrency accounts

Original source: Newsis

Compiled by: KarenZ, Foresight News

On February 13, South Korea held its third virtual asset committee meeting, planning to allow corporations to open real-name virtual asset accounts in phases, gradually opening up institutional participation in the virtual currency market. This policy marks South Korea's formal opening of the virtual asset market to corporate investors, reflecting changes in the South Korean virtual currency market environment and signaling a trend towards the mainstreaming of cryptocurrencies. However, at the same time, law enforcement agencies such as the prosecution and the National Tax Service have been allowed to open real-name accounts, which may transfer and sell criminal proceeds confiscated in virtual currency and collect tax arrears, potentially raising market concerns.

So what directives were issued at the third virtual asset committee meeting convened by the South Korean Financial Services Commission today? The following content is compiled from Newsis.

The Vice Chairman of the Financial Services Commission, Kim Joo-young (phonetic), convened the third virtual asset committee meeting and decided to advance the plan for corporations to open real-name virtual asset accounts in three phases, initially allowing law enforcement agencies, non-profit corporations, virtual asset exchanges, and other institutions that need to open accounts for "cash conversion purposes" to participate, with plans to gradually expand to professional investment corporations (for investment and financial purposes) and ordinary corporations in the future.

Therefore, the Financial Services Commission has drafted a roadmap to gradually allow corporate participation in the virtual currency market without compromising user protection and market stability.

Phase 1: Law Enforcement Agencies, Non-Profit Corporations, and Exchanges

Opening of Law Enforcement Agency Accounts (Completed)

Law enforcement agencies such as the prosecution, National Tax Service, Customs Service, and local governments have been allowed to open accounts since last November for the transfer and sale of virtual assets due to the confiscation of criminal proceeds and the compulsory collection of tax arrears.

Opening of Non-Profit Corporation Accounts (Planned for Completion in Q2 2025)

Non-profit corporations, such as designated donation groups, need to receive and liquidate virtual asset donations, and will be allowed to open corporate accounts in the second quarter of this year. However, due to the lack of specific standards and procedures in receiving and liquidating virtual assets, internal control standards need to be established in advance.

Opening of Virtual Asset Exchange Accounts (Planned for Completion in Q2 2025)

Exchanges need to sell virtual assets (their own assets) obtained from transaction fees for operational expenses such as employee salaries and taxes, thus requiring urgent sales transactions.

Given that such sales transactions may have a proprietary nature, potentially harming users by causing price declines, the South Korean government plans to establish public guidelines to limit the types and quantities of virtual assets sold.

Phase 2: Professional Investment Corporations (Planned to Start in H2 2025)

The second phase policy, which will be promoted in the second half of this year, plans to allow professional investment corporations to invest in virtual assets. According to the Capital Markets Act, professional investment corporations do not include financial companies but target listed companies and corporations registered as professional investors (about 3,500). This is to pilot transactions for investment and financial purposes, starting with trades from institutional investors with risk-bearing capacity.

Due to the potential anti-money laundering risks associated with large-scale virtual asset transactions, the government will implement this after establishing relevant guidelines and monitoring measures. Additionally, since the investment capabilities of various corporations differ, the opening of accounts will undergo detailed review by banks and exchanges.

Phase 3: Participation of Ordinary Corporations (Medium to Long-Term Plan)

The full participation of ordinary corporations will be studied as a medium to long-term plan, as it involves secondary legislation related to virtual assets and institutional adjustments such as foreign exchange tax systems. The second phase of legislation needs to include regulatory oversight of the business activities of virtual asset exchanges and a regulatory framework for stablecoins. At the same time, the Foreign Exchange Transaction Act needs to be improved to monitor cross-border virtual asset transactions.

Future Plans and Outlook

The Financial Services Commission plans to work with the government and private institutions to establish guidelines for corporate participation in virtual asset investments. Vice Chairman Kim Joo-young stated, "Regarding the second phase of virtual asset-related laws, including stablecoins, traders, and trading supervision, we will accelerate discussions within the virtual asset committee." He also added, "Regarding token securities, relevant legal amendments have been submitted, and we will actively support the National Assembly in swiftly passing the bill."