South Korea Lifts Nine‑Year Ban on Corporate Crypto Trading, Introduces Tight‑Knitted Rules
Seoul – Feb 17 2026 – The Financial Services Commission (FSC) announced that the prohibition on corporate participation in South Korea’s cryptocurrency market, first imposed in 2017, will be scrapped later this year. Roughly 3,500 listed firms and authorised professional investment houses will be permitted to trade digital assets, but only under a framework that caps exposure and limits the range of eligible tokens.
Key Takeaways
- Ban lifted: After almost a decade, corporations can again buy and sell crypto in South Korea, subject to new regulatory safeguards.
- Investment ceiling: Companies may allocate up to 5 % of their annual equity capital to cryptocurrencies.
- Asset restriction: Only the 20 largest cryptocurrencies by market cap, traded on the five regulated domestic exchanges, are allowed.
- Market impact: The move should gradually improve liquidity and bring institutional trading practices to the market, though the stringent caps keep large‑scale treasury inflows modest.
- Regulatory stance: South Korea’s approach is more cautious than the United States, EU, Japan or Hong Kong, which impose fewer quantitative limits on corporate crypto holdings.
Why the Ban Was Instituted
In the wake of a rapid retail‑driven boom in 2017, South Korean regulators grew wary of money‑laundering, market manipulation and broader financial‑system risks. The government responded by barring firms and professional investors from direct crypto exposure while still allowing individuals to trade under strict “real‑name” account requirements. The policy funneled most market activity into the hands of retail participants and encouraged Korean capital to seek exposure through overseas platforms.
What the New Guidelines Permit
The FSC’s draft rules outline a structured re‑entry for corporations:
- Eligible entities – Publicly listed companies and formally registered professional investment firms.
- Capital limits – Crypto holdings may not exceed 5 % of a firm’s yearly equity, a ceiling designed to keep balance‑sheet risk in check.
- Allowed assets – Trading is confined to the twenty highest‑market‑cap cryptocurrencies, such as Bitcoin (BTC) and Ether (ETH), on the nation’s five licensed exchanges. Smaller‑cap or highly volatile tokens are excluded.
- Exchange obligations – Platforms must adopt order‑flow controls, including staggered execution and caps on single‑order size, to curb price shocks and protect thin order books.
- Stablecoin treatment – The status of stablecoins like USDT remains under separate review and may be subject to future legislation.
How the Change Fits Into a Broader Strategy
The corporate‑trading guidelines are part of the FSC’s “2026 Economic Growth Strategy,” which aims to position South Korea as a leading digital‑asset hub. Upcoming legislation, notably the Digital Asset Basic Act, seeks to unify the country’s fragmented crypto regulations, covering exchange supervision, token issuance, custody, and investor protection. Parallel initiatives include the drafting of stablecoin rules pegged to the Korean won and a roadmap for spot‑crypto exchange‑traded funds (ETFs).
Anticipated Market Effects
Liquidity and Structure
Institutional participants typically employ longer horizons and systematic risk‑management tools. Their entry is expected to deepen order‑book depth, tighten bid‑ask spreads, and temper the volatility that stems from purely speculative retail trading. However, the 5 % cap limits the immediate scale of new capital, suggesting a gradual rather than abrupt shift.
Corporate Treasury Strategies
Globally, several firms have begun holding crypto as part of treasury diversification—most famously, companies that allocate Bitcoin on their balance sheets. South Korean critics argue that a rigid percentage ceiling may stifle innovative treasury models and constrain firms from tailoring risk exposure to their own governance frameworks.
Product Development
Increased corporate demand could incentivise local banks and asset managers to develop crypto‑linked financial products, ranging from ETFs and structured notes to custodial services. This would enhance South Korea’s competitiveness against regional financial centres such as Hong Kong and Singapore, which are actively courting digital‑asset firms.
International Comparison
| Jurisdiction | Corporate Crypto Cap | Licensing / Oversight |
|---|---|---|
| United States | No statutory percentage limit; standard accounting and disclosure rules apply | SEC, CFTC, state regulators |
| European Union | No explicit cap; subject to MiCA and national regulations | EU-wide framework |
| Japan | No quantitative cap; requires crypto‑asset service provider licensing | FSA |
| Hong Kong | No fixed cap; governed by SFC licensing regime | SFC |
| South Korea | 5 % of annual equity; only top‑20 tokens | FSC‑issued guidelines, exchange‑level safeguards |
South Korea’s model therefore represents a more precautionary pathway, aiming to test institutional participation while containing systemic exposure.
Risks Under the Spotlight
Regulators highlighted three primary concerns:
- Price volatility – Sharp moves could erode corporate balance sheets and dampen investor confidence.
- Operational reliability – Custody failures or exchange outages could jeopardise assets.
- Reputational fallout – Significant losses from speculative positions may harm a company’s public image.
By limiting both asset types and exposure size, the FSC hopes to mitigate these risks while gathering experience with institutional crypto activity.
What Comes Next?
The FSC plans to publish the final version of the corporate‑trading framework in early 2026, with implementation slated for later that year. The rollout will be synchronized with the enactment of the Digital Asset Basic Act. If the market remains stable and compliance mechanisms prove effective, industry groups are expected to lobby for higher exposure limits and an expanded list of permissible tokens.
Bottom Line
South Korea’s decision to lift the corporate crypto ban signals a strategic shift from a reactive, risk‑averse stance to a more measured, regulatory‑driven embrace of digital assets. While the imposed caps keep large‑scale treasury inflows modest for now, the move opens the door for institutional liquidity, new financial products, and a more diversified market structure. The long‑term success of this cautious opening will hinge on how well firms manage risk and how effectively regulators enforce the new safeguards.
Source: https://cointelegraph.com/news/south-korea-lifts-9-year-corporate-crypto-ban-what-the-policy-change-means?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
