Is South Korea Going Anti-Crypto? Three Moves, One Week

Three policy developments from South Korea in a single week have fed a growing sense among industry participants that regulators are pulling back — even as the country’s landmark Digital Asset Basic Act inches toward passage.

None of the three moves is, on its own, a prohibition. But taken together, they are being read by parts of the market as a pattern.

Prosecutors Liquidate Recovered Bitcoin Rather Than Hold It

The Gwangju District Prosecutors’ Office announced on March 10 that it had sold 320.88 Bitcoin — worth approximately 31.59 billion Korean won ($21.6 million) — recovered after a phishing incident, depositing the proceeds into state coffers.

The Bitcoin had originally been seized from a mother-daughter pair convicted of running an illegal online gambling operation in Thailand between 2018 and 2021. After the Supreme Court finalized forfeiture, prosecutors moved to execute the order — and discovered the entire holding was gone. Their own wallet had been compromised. Staff had accidentally accessed a phishing site during a custody handover procedure in August 2025. The funds were returned in January, apparently after prosecutors coordinated freezes across domestic and international exchanges.

To minimize market impact, prosecutors sold the coins in tranches over 11 days between February 24 and March 6.

What drew comment wasn’t the sale itself — forfeited assets are routinely liquidated. It was the contrast with a small but growing number of jurisdictions, including the US under the current administration, that have begun treating seized Bitcoin as a long-term state asset. Korea moved in the other direction, converting the recovered coins to cash at the earliest opportunity.

That choice isn’t a policy statement. But it is a data point.

Stablecoins Left Out of Corporate Investment Guidelines

Korea’s Financial Services Commission (FSC) is finalizing guidelines to allow listed companies to invest in digital assets for the first time — a significant market-opening step. But stablecoins, including Tether (USDT) and USD Coin ($USDC), are expected to be excluded from the approved investment universe, a local media reported on March 10.

The reasoning is rooted in a legal inconsistency rather than outright hostility. Under Korea’s Foreign Exchange Transactions Act, stablecoins are not recognized as external payment instruments. Allowing corporations to hold them as investments could implicitly endorse their use in trade settlement. Regulators are not yet ready to formalize that function. A legislative amendment to recognize stablecoins as payment instruments was submitted to the National Assembly in October 2025 but remains under review.

Some listed exporters had lobbied for the inclusion of $USDC, citing its practical utility for real-time FX hedging in international transactions. They will likely continue to route stablecoin use through offshore platforms and self-custody wallets in the interim.

The exclusion may be temporary — contingent on the amendment to the Foreign Exchange Transactions Act — rather than a structural position. But for companies waiting on a clear regulatory green light, the current answer is no.

Exchange Ownership Caps: The Numbers Are Still Moving

The most contested development involves proposed caps on major shareholder ownership in crypto exchanges, to be incorporated into the Digital Asset Basic Act.

The Democratic Party of Korea’s digital asset task force has reportedly reached an agreement with the FSC on a 34% ceiling. That’s softer than the 15–20% discussed earlier. The figure tracks the 33.4% blocking minority threshold under commercial law. The cap would apply uniformly to both existing and new exchanges. Phase-in periods of three to six years are under discussion, depending on exchange size.

But the proposal is drawing fire from multiple directions.

At a National Assembly seminar on March 9, opposition lawmakers argued the cap has no comparable precedent in the US or Europe. The National Assembly Research Service has flagged potential constitutional conflicts. Specifically, it cited concerns over property rights protections and the prohibition on retroactive legislation. Academic critics raised a separate worry: the “bystander effect.” Excessive ownership fragmentation could leave exchanges without a clear decision-maker in a crisis.

The cap’s most immediate practical test involves Dunamu, operator of Upbit, and its pending merger with Naver Financial. Under the post-merger structure, founder Song Chi-hyung would hold approximately 19.5% and Naver approximately 17%. Regulators are reportedly considering treating the two stakes separately — “owner equity” versus “partner equity” — which could allow the deal to proceed with modifications rather than being blocked outright.

Final terms remain under negotiation. A party-government consultation was targeting March, though geopolitical developments — including the US-Iran situation — may push the timeline to April.

What the Pattern Suggests — And What It Doesn’t

Each of these three moves has a discrete, defensible rationale. Forfeited assets get liquidated. Stablecoin exclusion reflects a legal gap, not a ban. Exchange ownership caps are framed as investor protection measures following past exchange failures.

But markets don’t always read individual policy decisions in isolation. The cumulative signal — sell Bitcoin, keep stablecoins out of corporate portfolios, limit who can own exchanges — lands differently than any single measure would on its own.

The Digital Asset Basic Act was supposed to answer the question of where Korea stands. So far, the fine print is doing the opposite.

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