South Korea kicked off 2025 with political chaos, regulatory warmth and a crypto market lastly dropped at heel — or not less than compelled to develop up.
The nation closed 2024 in disarray following then-President Yoon Suk Yeol’s botched martial legislation stunt in December.
Within the aftermath, authorities spent the primary quarter drawing strains within the sand as monetary watchdogs slapped cryptocurrency exchanges with probes and lifted the ban on company buying and selling accounts. In the meantime, crypto adoption hit file highs as buying and selling quantity cooled.
Right here’s a breakdown of the important thing developments that formed South Korea’s crypto sector in Q1 of 2025.
South Korean crypto merchants given yet one more two-year tax exemption
Jan. 1 — Crypto tax postponed
A deliberate 20% capital positive factors tax on crypto didn’t take impact on Jan. 1 after lawmakers agreed to delay it till 2027. This was the third postponement: first from 2022 to 2023, then once more to 2025.
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The newest delay, reached by means of bipartisan consensus in late 2024, got here amid mounting financial uncertainty and political turmoil. Lawmakers cited fears of investor flight to offshore exchanges, challenges in monitoring wallet-based income, and shifting nationwide priorities within the wake of Yoon’s failed martial legislation stunt and subsequent impeachment.
Jan. 14 — Warning in opposition to North Korean crypto hackers
The US, Japan and South Korea revealed a joint assertion on North Korean crypto hacks. Crypto companies had been warned to protect in opposition to malware and pretend IT freelancers. Lazarus Group, the state-sponsored cyber risk group, was named as a primary suspect in a number of the prime hacks in 2024, such because the $230-million hack on India’s WazirX and the $50-million hack against Upbit, South Korea’s largest crypto alternate.
Jan. 15 — Corporations wait on the sidelines for crypto greenlight
South Korea’s Digital Asset Committee, a crypto coverage coordination physique beneath the Monetary Companies Fee (FSC), held its second assembly. The FSC was broadly anticipated to approve company entry to buying and selling accounts on native exchanges. Regardless of well-liked demand, the FSC held off on making an official determination, citing the necessity for additional overview.
As an alternative, the FSC introduced investor protections in opposition to worth manipulation and stricter stablecoin oversight.
Jan. 16 — First enforcement of crypto market manipulation
South Korean authorities indicted a dealer within the first pump-and-dump prosecution beneath the Digital Asset Consumer Safety Act, the brand new crypto legislation efficient from July 2024.
In the meantime, Upbit received a suspension notice for allegedly violating Know Your Customer (KYC) requirements in over 500,000 situations, prompting regulators to think about a ban on new person registrations.
Jan. 23 — Upbit, Bithumb compensate customers after service outages throughout martial legislation
Upbit and rival alternate Bithumb introduced plans to compensate users following service disruptions triggered by the surprise declaration of nationwide martial law on Dec. 3, 2024. The surprising transfer triggered panic throughout monetary and crypto markets, resulting in a surge in site visitors that overwhelmed native buying and selling platforms.
South Korean crypto world lastly opened to companies
Feb. 13 — Charities and universities get first dibs on company crypto entry
The FSC unveiled its long-awaited plan to allow corporate entities to open crypto trading accounts in phases by late 2025. The rollout would require companies to make use of “real-name” accounts and adjust to KYC and Anti-Cash Laundering (AML) rules. Charities and universities are first in line and can be allowed to promote their crypto donations beginning within the first half of the yr.
South Korea’s real-name monetary transaction system, launched in 1993, was designed to fight tax evasion and cash laundering by requiring all financial institution accounts to be opened beneath verified authorized names utilizing nationwide IDs.
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Crypto buying and selling exploded in 2017, pushed partially by anonymous accounts from businesses, foreigners and minors. Monetary authorities responded by requiring crypto exchanges to companion with home banks and supply fiat companies solely by means of verified real-name accounts. So far, solely 5 exchanges have met the necessities.
Since there was no regulatory framework for real-name company accounts, this coverage successfully shut out each abroad customers and home corporations from buying and selling on South Korean exchanges. The brand new roadmap goals to repair that by creating a proper construction for institutional participation beneath tighter compliance requirements.
Feb. 21 — Alleged serial fraudster busted once more
Police rearrested “Jon Bur Kim,” recognized by the surname Park, for allegedly profiting 68 billion received (roughly $48 million) in a crypto rip-off involving the token Artube (ATT). He allegedly employed false promoting, pump-and-dump techniques and wash buying and selling to govern the market.
This wasn’t Park’s first brush with the legislation. He was beforehand indicted in a 14-billion-won (round $10 million) token fraud case and was out on bail when he launched ATT.
Feb. 25 — Upbit operator Dunamu will get slapped
The nation’s Monetary Intelligence Unit (FIU) formally notified Dunamu, operator of Upbit, of regulatory motion. The sanctions had been tied to KYC compliance failures and dealings with unregistered overseas exchanges. The FIU issued a partial business suspension, proscribing Upbit from processing new prospects’ deposits and withdrawals for 3 months.
Feb. 27 — Crypto crime power formalized
South Korean prosecutors formally launched the Digital Asset Crime Joint Investigation Division, following a yr and 7 months as a short lived operation. As a non-permanent unit from July 2023, the duty power indicted 74 people, secured 25 arrests, and recovered over 700 billion received (round $490 million) in illicit positive factors. The 30-person activity power consists of prosecutors, regulatory workers and specialists.
Feb. 28 — Upbit operator Dunamu recordsdata lawsuit to overturn enterprise sanctions
Dunamu stated it filed a lawsuit in opposition to the FIU to challenge the sanctions imposed on the exchange.
Bitcoin ETF subsequent on guidelines for South Korean crypto area
March 5 — Reconsidering Bitcoin ETF ban
The FSC began reviewing authorized pathways to permit Bitcoin (BTC) spot exchange-traded funds (ETFs), citing Japan’s evolving regulatory approach as a potential model. This marks a notable shift from South Korea’s earlier opposition to crypto-based ETFs.
The Capital Markets Act doesn’t acknowledge cryptocurrencies as eligible underlying belongings for ETFs. Nonetheless, in 2024, lobbying efforts from major domestic brokerages intensified amid rising shopper demand, particularly after spot Bitcoin ETFs were approved in the US.
Whereas the overview stays in its early levels, regulators are not dismissing the likelihood outright.
March 21 — Crackdown on unregistered exchanges begins
The FIU compiled a listing of unlawful overseas exchanges and moved to dam entry through app shops and ISPs. Moreover, the company warned of felony penalties for buying and selling platforms working with out a license.
March 26 — 17 alternate apps blocked (together with KuCoin and MEXC)
Google Play removed 17 unlicensed crypto exchange apps in South Korea on the request of regulators. The FIU stated it’s also working with Apple to dam unauthorized crypto platforms.
March 27 — Upbit scores three-month break
A South Korean courtroom temporarily lifted the Feb. 25 partial business suspension imposed on crypto alternate Upbit by the FIU. The courtroom’s determination permits Upbit to renew serving new customers whereas the case is beneath overview.
South Korean crypto anticipated to go from crackdown in Q1 to marketing campaign path in Q2
As March ended, greater than 16 million investors — roughly a 3rd of South Korea’s inhabitants — held crypto accounts, surpassing the 14.1 million home inventory merchants. However that surge in adoption got here as buying and selling exercise cooled. Upbit, the nation’s dominant alternate, noticed volumes fall by 34%, dropping from $561.9 billion in This fall 2024 to $371 billion in Q1 2025, based on CoinGecko.
By mid-April, the crackdown was nonetheless gaining steam. Apple adopted Google’s lead in removing offshore exchange apps from its store, whereas prosecutors filed yet one more spherical of market manipulation expenses.
South Korea’s crypto {industry} is now contending with tighter guidelines, rising institutional expectations and a authorities not content material to look at from the sidelines.
All this unfolds forward of an early presidential election in June, following Yoon’s impeachment. Crypto performed a visual function in Yoon’s successful 2022 presidential election campaign and is anticipated to stay a key concern with voters.
One candidate within the upcoming election, former prosecutor Hong Joon-pyo of the Individuals Energy Get together, not too long ago pledged to overtake crypto rules consistent with the pro-industry stance of the Trump administration, native media reported. Regardless of the pledge, Hong’s understanding of the expertise got here into query as he admitted to not realizing what a central financial institution digital foreign money is.
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