South Korea's crypto regulation has recently shown new developments. This year, only 2 virtual asset service providers (VASPs) have been approved—Happy Block and BioSafe—down from last year by half. Even more outrageous is that the review cycle is getting longer, taking an average of 16 months to complete.

It seems that regulation is indeed tightening, and market sentiment is somewhat冷. But looking closely at the underlying logic, things are not that simple.

The industry leader Uppit recently successfully renewed its license, and exchanges like Korbit have finally come into compliance with sanctions. What does this indicate? It shows that Korean regulators are quickly clearing out market uncertainties. Non-compliant and scam platforms have been swept out, leaving only genuine players.

Strict scrutiny effectively eliminates low-quality players, leaving only top-tier exchanges. As a result, investor confidence will actually rebound—after all, you know your assets are in trustworthy places. Market normalization and an increase in compliant exchanges will naturally boost liquidity. In the long run, this is the foundation for the stable growth of the crypto industry.

Clarification of regulations often occurs before market rebounds. This time, Korea's adjustments should be no exception.