The South Korean Presidential Election May Trigger Four Major Changes in the Global Crypto Assets Market

South Korea will hold a presidential election on June 3. As the world's third-largest Crypto Assets market, the results of this election may have a profound impact on the global Crypto Assets market.

South Korea's Position as a Key Hub for Web3

South Korea has a daily trading volume of $5.4 billion and 9.7 million active users, making it the third largest Crypto Assets market in the world, after the United States and China. As an important window to the Asian market, South Korea has become a key benchmark for global projects entering Asia.

The strong interest of Korean investors in altcoins and the active on-chain activities make it an important indicator for measuring the global acceptance of new projects. Many global projects view Korea as a strategic starting point for entering the Asian market.

Four Major Changes Expected to Occur

1. Crypto Assets tax policy adjustment

Currently, the taxation of virtual assets in South Korea has been postponed until 2027. However, the new government is likely to implement taxation earlier, which may lead to a significant decline in trading volume on domestic exchanges.

Referencing international precedents, after introducing Crypto Assets taxes, India and Indonesia saw transaction volumes decrease by 10%-70% and 60% respectively. Even with relatively lower tax rates in South Korea, local exchange trading volumes may still decline by over 20%, with some funds possibly shifting to overseas platforms.

2. The possibility of approval for Crypto Assets ETF has increased.

All major candidates support the introduction of a Bitcoin spot ETF, which increases the likelihood of its early approval. If realized, it will compete with existing exchanges on fees, potentially lowering the investment threshold and improving market accessibility.

In the long run, the launch of ETFs may spur more financial innovation and pave the way for new products that integrate Crypto Assets with traditional finance.

3. The "One Exchange One Bank" model may be adjusted.

Currently, South Korea implements a "one exchange, one bank" model, where each licensed exchange can only cooperate with one bank. Some political parties have proposed abolishing this rule and shifting to a "one exchange, multiple banks" model.

Allowing multiple banks to collaborate may enhance market competition, bringing users lower fees and more innovative services. However, regulatory agencies remain cautious, and this transformation may require a long period of discussion.

4. Regulatory Framework for Korean Won Stablecoin

Although South Korea previously focused more on central bank digital currency (CBDC), the demand for the Korean won stablecoin is increasing. Major candidates have begun discussing relevant policies, but they are still at the vision stage.

To achieve breakthroughs, it is necessary to establish a comprehensive legal regulatory framework, including determining qualified issuers, ensuring collateral transparency, and formulating anti-money laundering measures. Given the complexity, it is expected to be promoted in a phased, medium to long-term manner.

Conclusion

Although these policy changes are significant for the industry, it is difficult to fully implement them in the short term. Regulatory changes may be gradually promoted and discussed in parallel with other policy issues. However, the trend of transformation is irreversible.

The final implementation of cryptocurrency taxation is set in stone. Legislative discussions surrounding the issuance of security tokens (STO) are also expected to restart. Market participants should prepare in advance for the increasingly standardized and compliant policy environment.