What To Know:
- South Korea now allows listed companies and professional investors to allocate up to 5% of equity capital to top cryptocurrencies.
- The move ends a 2017-era ban and may open the market to around 3,500 corporate entities.
- Regulators will impose trading controls to limit volatility and manage large corporate orders.
South Korea’s financial authorities have lifted a long-standing ban that barred listed companies and professional investors from holding cryptocurrency equity investments. The move has opened the door for corporate participation in a market that was, until now, dominated almost entirely by retail traders.
South Korea: Lifts Ban on Crypto Equity Capital investments
As per local media reports, eligible corporations and registered professional investors will be allowed to invest up to 5% of their equity capital in crypto such as Bitcoin and Ethereum. The policy is a part of the second phase of measures for corporate involvement in crypto markets, first outlined by the Financial Services Commission (FSC) in February last year. Officials expect the change to enable market access for roughly 3,500 listed firms and investment institutions.
According to financial industry sources, the FSC recently finalized draft guidelines titled “Virtual Currency Trading Guidelines for Listed Corporations” and shared them with a joint public-private task force earlier this month. A senior industry official familiar with the discussions said authorities plan to release the final version of the rules in January or February. Once the guidelines are formally adopted, corporate trading for investment and financial purposes will be permitted, potentially within the year, depending on the timing of related legislation.
The rollout is closely linked to the Framework Act on Digital Assets, which is scheduled to be effective in the Q1 of 2026. After nearly a decade of caution, regulators now appear willing to integrate corporate capital into the domestic crypto market, while still maintaining firm guardrails.
Those guardrails are significant. Annual crypto investments will be capped at 5% of a company’s equity capital, reflecting concerns about volatility and balance-sheet risk. Investment targets will also be limited. Corporations will be permitted to buy only cryptocurrencies that rank among the top 20 by market capitalization, as selected semiannually by South Korea’s five major domestic exchanges. Authorities are still debating whether dollar-pegged stablecoins such as Tether’s USDT should be included in the approved list.
To minimize risks related to large order-trading based volatility of price, regulators will introduce additional controls at the exchange level. These include standards for fractional trading as well as limitations on orders that venture outside of key price ranges. Exchanges will also need to stagger large trades, so that corporate transactions have little immediate effects on market prices. The ruling abolishes a ban that dates back to 2017, when South Korea prohibited investment in corporate cryptocurrency in the face of fears about money laundering, the speculative excess of cryptocurrencies and hot market conditions overall. Since then, the domestic crypto market has grown rapidly, but in a lopsided way. Individual investors account for nearly all trading activity, a structure that has fueled volatility and short-term speculation.
Industry participants broadly welcome the policy change, though some argue the investment cap remains overly conservative. In the United States and Japan, there are no explicit limits on corporate cryptocurrency holdings. Jurisdictions such as the European Union and Singapore also permit corporate investment with fewer quantitative restrictions. Critics say South Korea’s 5% ceiling could dampen the scale of capital inflows and make it harder for specialized crypto investment firms to emerge.
Even with the cap in place, the potential impact is substantial. Tens of trillions of won could enter the market once corporate participation begins. Naver, for example, reported equity capital of about 27 trillion won as of the end of September last year. At current prices, a full 5% allocation to Bitcoin could translate into holdings exceeding 10,000 coins.
Market observers say the entry of companies with deep pockets and structured risk management could help rebalance the ecosystem. In the first half of last year, South Korea’s crypto investor count surpassed 10 million, yet an estimated 76 trillion won flowed overseas. Analysts attribute much of that outflow to speculative trading behavior and the heavy weighting of altcoins, which make up roughly twice the share of total market capitalization compared with overseas markets.
Also Read: South Korea Ministry of Economy and Finance to Launch Crypto ETF
