South Korea to lift ban on listed company investments in cryptocurrencies, will thousands of "whales" once again drive the "Kimchi Premium"?

Author: Zen, PANews

The Korean cryptocurrency market may usher in a new landscape, with retail investors dominating and institutional participation absent, but now facing a turning point.
On January 14, the Korea Composite Stock Price Index (KOSPI) broke through the 4,700-point mark during trading for the first time in history, reaching a new high. Just as the Korean stock market welcomed this positive development, the country’s crypto market also quietly received significant good news.
According to South Korean media reports, the Financial Services Commission (FSC) plans to lift the ban on corporate cryptocurrency investments that has been in place since 2017, aiming to allow listed companies and professional investors to participate in cryptocurrency trading. During a government-private sector working group meeting on January 6, FSC shared a draft guideline related to this initiative.

Breaking nine years of restrictions, Korean listed companies will be permitted to invest in cryptocurrencies
This new regulation essentially extends and further refines the “Promotion of Virtual Asset Market Plan” announced by FSC in February last year. The original plan was to conduct pilot testing in the second half of last year, allowing some institutional investors with risk tolerance to open real-name trading accounts for investment and financial purposes.
The target group eligible for participation in the pilot includes approximately 3,500 listed companies and enterprises registered as professional investors under the Capital Markets Act, excluding financial institutions. FSC stated that registered professional investors under the Capital Markets Act are already permitted to invest in derivatives with the highest risk and volatility, and these companies have a high demand for blockchain-related businesses and investments.
According to disclosures from the Seoul Economic Daily, FSC plans to allow qualified corporate entities to invest up to 5% of their net assets in cryptocurrencies annually. The new rules also specify the scope of investable coins, limited to the top 20 cryptocurrencies by market capitalization, focusing on liquid and large-scale mainstream coins such as Bitcoin and ETH.
The specific rankings are determined based on data published biannually by DAXA, an alliance of South Korea’s five major crypto exchanges. Whether stablecoins pegged to the US dollar (such as USDT) should be included is still under discussion by regulators, with no clear decision yet.
In addition, regarding trading execution mechanisms, exchanges are required to split and batch large crypto transactions and set limits on individual order sizes. This means large buy or sell orders must be broken into smaller orders for gradual execution, and abnormal trading behaviors will be monitored to reduce market impact, prevent manipulation, and mitigate liquidity risks. This mechanism aims to ensure market stability after institutional funds enter.
It should be noted that the provisions in the draft regulations above are not final. FSC emphasized in a statement that the guidelines are still under review and development, with key details such as investment limits and eligible assets yet to be finalized. Sources suggest that FSC expects to announce the final guidelines as early as January to February 2026. If the guidelines are successfully implemented, corporate and institutional crypto trading is expected to officially commence before the end of 2026.

Distorted market structure under restrictions: retail frenzy, institutional absence
The relaxation of the corporate crypto investment ban by Korean regulators marks a significant shift since the implementation of strict regulations in 2017.
In 2017, cryptocurrencies like Bitcoin surged explosively in Korea, highlighting phenomena like the “Kimchi Premium,” with retail speculation running high, and a proliferation of ICOs and other irregularities, prompting regulatory concern. On the other hand, due to anti-money laundering and financial crime prevention considerations, Korean authorities feared large capital flows escaping regulation via crypto assets. As a result, they swiftly introduced emergency measures, including banning corporate participation in crypto trading.
The nine-year corporate ban fundamentally changed Korea’s crypto market participation structure. The market was almost entirely filled with retail investors, while large institutions and corporate funds were kept off the scene, leading to limited trading volume and activity. Meanwhile, some institutions and high-net-worth funds seeking digital asset exposure turned to overseas markets for more relaxed investment channels.
The retail-dominated, institution-absent landscape of Korea’s crypto market starkly contrasts with mature markets where institutional participation is significant. Although the strict ban in 2017 initially curbed domestic speculation, it also, to some extent, caused Korea’s market to fall out of sync with the global institutional wave.
In recent years, Korean regulators have begun gradually easing restrictions on institutional crypto involvement. As digital assets have matured globally, institutional participation has increased significantly, prompting Korean authorities to realize that clinging to old policies would mean missing out on development opportunities. The Korean government’s “2026 Economic Growth Strategy” explicitly includes digital assets as part of the future financial landscape.
Since last year, Korea has tentatively relaxed some rules, such as allowing non-profit organizations and crypto exchanges to sell their holdings of digital assets. With the recent draft guidelines from FSC, regulatory authorities have finally reopened the door for corporate crypto investments, making a major correction to previous strict policies and becoming an important part of Korea’s digital finance strategy.

Major new entrants and the DAT narrative cooling to freezing point
Korea’s crypto market has long been known for high speculation and retail frenzy, but with thousands of large companies and professional institutions soon gaining access and being permitted to participate as major new forces, the industry is expected to see considerable new developments.
Some Korean media cite that Naver, a Korean internet giant currently acquiring the parent company of the Korean exchange Upbit, has a book value of 27 trillion KRW and, with a 5% cap, could theoretically purchase about 10,000 Bitcoins. Such a massive influx of institutional capital would significantly boost liquidity and depth in the domestic market. Industry analysts expect this move will attract Korean capital that has been on the sidelines overseas to flow back into the local crypto market through legitimate channels, supporting the development of the domestic trading ecosystem. The potential inflow after lifting restrictions could reach several tens of trillions of KRW (over a hundred billion USD).
Furthermore, under the previous ban, large companies could not participate in the crypto space, which somewhat suppressed corporate enthusiasm for exploring blockchain technology and digital assets. With openness, domestic crypto firms, blockchain startups, and related industries such as digital asset custody and venture capital are expected to see indirect growth.
Cointelegraph’s analysis indicates that institutional entry will drive expansion of Korean crypto companies and startups, and foster the emergence of enterprise-level Digital Asset Treasuries (DATs). Additionally, allowing legitimate token holdings could promote cross-border blockchain collaborations and attract overseas crypto institutions to Korea, enhancing Korea’s position as an Asian crypto financial hub.
However, the effectiveness of the DAT strategy in Korea faces multiple challenges. On one hand, policy restrictions make it difficult for Korea’s version of “treasury companies” to fully develop, with a low 5% investment cap limiting the proportion of crypto holdings. On the other hand, most existing crypto treasury companies, apart from pioneers like Strategy that have been around for years, have suffered significant losses due to the “crypto and stock market declines,” cooling the DAT narrative to a standstill and dampening global investor interest.
Easier investment channels also weaken the necessity of the DAT strategy. As major global markets promote compliant investment products like Bitcoin spot ETFs, institutions and investors can directly share Bitcoin’s price gains through ETFs. Since ETFs are simpler and safer investment tools, there is little incentive to pay premiums for listed company holdings. Korea is also pushing to launch spot ETFs based on Bitcoin and other assets, with a possible launch before the end of this year.
Another factor not to be overlooked is that, according to market observations, Korea’s crypto market remained subdued in the second half of last year, with many investors shifting to stocks. As of January 14, the KOSPI broke through 4,700 points during trading for the first time, reaching a new all-time high. Sectors with more fundamental backing, such as semiconductors, AI, shipbuilding, and defense industries, clearly cannot be compared to the DAT concept.
Nevertheless, the positive signals released by Korea’s policy shift are worth acknowledging and looking forward to. Over the next year, as related guidelines and legal frameworks are implemented, the actual investment actions of Korean companies will be closely watched. However, for the crypto industry itself, it remains crucial to develop new narratives and regain broad participation from Korean investors to overcome current challenges.