South Korea
South KoreaA giant retail crypto market with user protection in force, still waiting on won stablecoins, corporate access and its first crypto tax.
Korea's crypto rules were written in reaction to retail mania.
After the 2017 boom the government banned ICOs, closed the market to corporates and tied every won deposit to a real-name bank account.
The Specific Financial Information Act then required exchanges to report to the Korea Financial Intelligence Unit (KoFIU) by September 2021, which wiped out dozens of small venues and left only a handful of exchanges with won banking.
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The Terra-Luna collapse in May 2022, a Korean-founded project, turned the debate to investor protection.
The Act on the Protection of Virtual Asset Users took effect on 19 July 2024: exchanges must keep customer cash at banks, hold at least 80% of customer crypto in cold wallets and carry insurance or reserves, while price manipulation and insider trading became crimes supervised by the FSC and FSS.
The second phase has proved harder.
Several Digital Asset Basic Act bills, starting with Min Byung-deok's in June 2025, would license issuers and service providers and create won stablecoins, but they have stalled over whether banks must own a majority of any issuer and over a 20% cap on exchange shareholders.
In September 2026 a planned public hearing was cancelled and the FSC still had not sent its own draft, pushing committee review to November at the earliest.
Builders face a market with deep retail liquidity (11.2 million tradeable exchange accounts at end-June 2026) but closed doors elsewhere.
Listed companies still cannot trade crypto because the phase 2 corporate guidelines are on hold, the 22% crypto gains tax finally starts in January 2027 after three delays, and tokenised securities become legal on 4 February 2027.
Stricter KoFIU registration rules from August 2026 raise the bar for new entrants.
Latest regulatory progress
All 31 laws, bills and rules- Income Tax Act (virtual asset income provisions)Enacted Ministry of Government Legislation (National Law Information Center)
- KoFIU Unveils H1 2026 Survey Result on Virtual Asset Service ProvidersGuidance Korea Financial Intelligence Unit (KoFIU)
- FSC Proposes Rules Change to Pave Way for Tokenization of Securities Issuance and CirculationConsultation Financial Services Commission (FSC)
- FSC Introduces Policy Roadmap on Digital Transformation and Tokenization of Securities Issuance and CirculationGuidance Financial Services Commission (FSC)
Who regulates
FSCFinancial Services CommissionIn charge of
Korea's top financial policymaker. It writes rules under the financial statutes, licenses banks, insurers and securities firms, and directs the FSS and KoFIU.
FSC websiteOn crypto
Administers the Act on the Protection of Virtual Asset Users, in force since 19 July 2024, and has yet to send its own phase 2 Digital Asset Basic Act draft. It set the 2025 roadmap for corporate crypto access and in April 2026 ordered five-minute balance checks at exchanges after Bithumb's erroneous payout.
FSSFinancial Supervisory ServiceIn charge of
The FSC's supervisory and examination arm. It inspects banks, securities firms, insurers and other financial companies, investigates unfair trading and handles consumer complaints.
FSS websiteOn crypto
Inspects exchanges and custodians for compliance with the User Protection Act, including bank custody of user cash and cold storage, and investigates price manipulation and insider trading in virtual assets, crimes since July 2024. From February 2027 brokers must consult it before handling token securities.
KoFIUKorea Financial Intelligence UnitIn charge of
Korea's financial intelligence unit, housed in the FSC. It receives suspicious transaction reports, supervises anti-money laundering compliance and passes intelligence to law enforcement.
KoFIU websiteOn crypto
Registers VASPs under the Specific Financial Information Act (28 at end-June 2026: 19 exchanges and 9 custody or wallet providers) and renews them every three years. Since 20 August 2026 it screens major shareholders' records and requires a debt ratio of 200% or below; the travel rule covers transfers of all sizes from 19 February 2027.
BOKBank of KoreaIn charge of
Korea's central bank. It sets the base rate to keep prices stable, issues the won and oversees payment and settlement systems.
BOK websiteOn crypto
Ran the Project Hangang pilot, in which up to 100,000 citizens paid with bank deposit tokens from April to June 2025. It argues won stablecoins should come from bank-majority issuers, the point that has stalled the Digital Asset Basic Act, and has not decided to issue a CBDC.
NTSNational Tax ServiceIn charge of
Korea's national tax administration. It assesses and collects national taxes such as income, corporate and value added tax, and carries out tax audits.
NTS websiteOn crypto
Will collect the 22% tax (20% plus 2% local tax) on annual virtual asset gains above ₩2.5 million from 1 January 2027, with first filings due in May 2028. Exchanges must submit customer transaction data to it, and it publishes the official guide to calculating crypto income.
Licences
Requirements and holders- Virtual asset service provider (VASP) registration: exchangeKoFIU · Act on Reporting and Using Specified Financial Transaction Information, Art. 7
- Virtual asset service provider (VASP) registration: custody and walletKoFIU · Act on Reporting and Using Specified Financial Transaction Information, Art. 7
- Issuer account management entity for token securitiesFSC · Act on Electronic Registration of Stocks and Bonds, as amended January 2026 (effective 4 February 2027)
- Financial investment business licence for token securities distribution and OTC tradingFSC · Financial Investment Services and Capital Markets Act, as amended January 2026
What to watch
- Whether the Digital Asset Basic Act and won stablecoin rules reach committee review after the November 2026 audit season, and how the bank-majority issuer question is resolved.
- Release of the phase 2 guidelines letting listed companies and professional investors trade crypto, reportedly drafted with a cap of 5% of equity capital.
- The first crypto gains tax year from 1 January 2027, with first filings due in May 2028; the 2027 start is still in the Income Tax Act, but Kim Jae-seop's bill no. 2221570 of 23 September 2026 seeks a delay to 2030.
- Launch of token securities on 4 February 2027, starting with institutional bonds, MMFs, trust-based unlisted stocks and fractional investments; draft implementing rules are open for comment until 11 November 2026.
Latest news
All news- "Now It's Time to Enact a Basic Digital Asset Act" ... All-Out Push for a Basic Law After the Tax Deferral Block Media
- Han Byung-do: "Time to Gather Party Opinion on Whether to Delay Crypto Taxation" Digital Asset
- "Reported balances just for sending coins overseas once?"... Investors and legal circles raise 'privacy infringement' concerns Block Media
- Coinone Supports Refund of 7.5 Billion Won in Voice Phishing Damages Over Three Years Digital Asset
Quick answers
Is crypto legal in South Korea?
Yes. Individuals can buy and sell crypto onshore through licensed providers. Retail trades on five won exchanges via real-name bank accounts; corporates are still largely excluded. Four Pillars rates retail access in South Korea as comprehensive (reviewed 5 Oct 2026).
Who regulates crypto in South Korea?
Five authorities shape crypto rules in South Korea. FSC (Financial Services Commission): sets crypto policy, administers the Virtual Asset User Protection Act and drafts the Digital Asset Basic Act. FSS (Financial Supervisory Service): inspects VASPs, polices unfair trading in virtual assets and supervises token securities intermediaries. KoFIU (Korea Financial Intelligence Unit): accepts and renews VASP registrations and enforces AML rules, including the travel rule. BOK (Bank of Korea): central bank; runs the Project Hangang deposit token pilot and argues for bank-led won stablecoins. NTS (National Tax Service): will collect the virtual asset income tax and receive exchange transaction reports from 2027.
Do crypto exchanges need a licence in South Korea?
Yes, under a dedicated regime. KoFIU reporting since 2021 and the User Protection Act since July 2024; 28 registered VASPs at end-June 2026. The main licences are Virtual asset service provider (VASP) registration: exchange from KoFIU, held by 19 as of 30 Jun 2026; Virtual asset service provider (VASP) registration: custody and wallet from KoFIU, held by 9 as of 30 Jun 2026; and Issuer account management entity for token securities from FSC. Four Pillars rates exchange licensing in South Korea as comprehensive (reviewed 5 Oct 2026).
Are stablecoins regulated in South Korea?
Not fully yet: the regime is being built. No won stablecoin regime; issuer bills stalled over whether banks must hold a majority stake. The most recent official text is Act on the Value-Stable Digital Asset Issuance Business (bill no. 2212298) (National Assembly of the Republic of Korea, 21 Aug 2025, bill). Four Pillars rates its stablecoin regime in South Korea as developing (reviewed 5 Oct 2026).
How is crypto taxed in South Korea?
Untaxed today; 22% on annual gains above ₩2.5M is legislated from January 2027. Four Pillars rates tax clarity in South Korea as developing (reviewed 5 Oct 2026).
Can real-world assets be tokenised in South Korea?
Not fully yet: the regime is being built. STO amendments passed January 2026 and take effect 4 February 2027. Four Pillars rates tokenisation and real-world assets in South Korea as developing (reviewed 5 Oct 2026).
What changed most recently in South Korea's crypto rules?
20 Aug 2026: Stricter VASP registration requirements take effect. Registrants now need a debt ratio of 200% or below and clean records for executives and largest shareholders. 6 Apr 2026: Exchanges ordered to reconcile balances in real time. After Bithumb's erroneous payout in February 2026, the FSC required five-minute ledger-to-wallet checks and kill switches.
What should companies watch next in South Korea?
Whether the Digital Asset Basic Act and won stablecoin rules reach committee review after the November 2026 audit season, and how the bank-majority issuer question is resolved. Release of the phase 2 guidelines letting listed companies and professional investors trade crypto, reportedly drafted with a cap of 5% of equity capital. The first crypto gains tax year from 1 January 2027, with first filings due in May 2028; the 2027 start is still in the Income Tax Act, but Kim Jae-seop's bill no. 2221570 of 23 September 2026 seeks a delay to 2030.
Timeline
Stricter VASP registration requirements take effect
Registrants now need a debt ratio of 200% or below and clean records for executives and largest shareholders.
Exchanges ordered to reconcile balances in real time
After Bithumb's erroneous payout in February 2026, the FSC required five-minute ledger-to-wallet checks and kill switches.
VASP entry rules tightened by law
The Specific Financial Information Act amendment lets KoFIU check major shareholders' criminal records and financial soundness.
Token securities legislation passes
Amendments to the Electronic Registration Act and the Capital Markets Act recognise distributed ledgers as securities registries.
Digital Asset Basic Act introduced
Min Byung-deok's bill proposed issuer and service provider licensing and a regime for won stablecoins.
Bank of Korea starts the Project Hangang pilot
Up to 100,000 citizens used bank deposit tokens for retail payments until 30 June 2025.
FSC unveils phased roadmap for corporate crypto access
Non-profits and exchanges could sell crypto from June 2025; listed firms and professional investors were promised access later.
Crypto tax delayed a third time, to 2027
The National Assembly moved the start of the 22% tax on virtual asset income to 1 January 2027.
Act on the Protection of Virtual Asset Users takes effect
It mandates bank custody of user cash, cold storage of user crypto and criminal penalties for market abuse.
Terra-Luna collapses
The failure of the Korean-founded stablecoin project pushed lawmakers toward a dedicated user protection law.
Travel rule takes effect for transfers of ₩1 million or more
Exchanges began exchanging sender and recipient data on transfers between registered VASPs.
VASP reporting under the Specific Financial Information Act begins
Exchanges had until 24 September 2021 to register with KoFIU, with a real-name bank account required for won trading.
Cite this page: Four Pillars Asia Digital Asset Policy Center, “South Korea crypto regulation”, reviewed 5 Oct 2026, https://policy.4pillars.io/south-korea. Free to reuse with attribution; also as markdown and JSON.
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