The 9-year crypto ban in South Korea ends, and 3,500 institutions are allowed to enter

South Korea’s Financial Services Commission (FSC) officially approves listed companies and professional investors to invest in cryptocurrencies, ending a 9-year corporate crypto ban that has been in place since 2017. Eligible institutions can invest up to 5% of their capital annually in the top 20 cryptocurrencies by market capitalization, allowing approximately 3,500 entities to enter the market. This marks a significant turning point in South Korea’s crypto policy.

Specifics of the Lifting of the Ban

Investment Restriction Framework

South Korea FSC’s new regulations set clear parameters for institutional investors:

• Investment subjects: listed companies and professional investors
• Investment ratio: up to 5% of capital per year
• Investment scope: top 20 cryptocurrencies on major Korean exchanges
• Expected effective date: by the end of 2026

This means that the 3,500 qualified entities can legally allocate crypto assets, but their investment scale is strictly controlled. The 5% cap on capital reflects a balanced approach by regulators—opening the market while safeguarding against risks.

Importance of Historical Context

This decision ends a long-standing ban that has been in place since 2017. That year marked a period of global crypto market boom, and South Korea, citing security and risk concerns, imposed a ban on corporate crypto investments. Over the past nine years, while individual trading was permitted, institutional involvement remained restricted.

Now, with the ban lifted, it reflects the South Korean government’s reassessment of the maturity of the crypto ecosystem and a better understanding of market risks.

Market Impact Analysis

Potential Scale of Capital Inflows

Although the 5% limit sounds modest, the 3,500 eligible entities represent a substantial capital base. These listed companies and professional investors typically have large equity capital, so even a 5% allocation could result in significant crypto holdings.

According to reports, the new regulations are also linked to South Korea’s recent approval of spot crypto ETFs, indicating that the government is systematically advancing the legalization of crypto assets.

Chain Reaction in the Market

Legalization of institutional investment could trigger several ripple effects:

• Increased institutional recognition of cryptocurrencies
• Potential growth in liquidity and trading volume on Korean exchanges
• The top 20 coins (mainstream cryptocurrencies) may attract more institutional funds
• Other countries and regions might follow suit with similar policies

Strategic Layout of South Korea’s Crypto Ecosystem

This policy decision is not isolated. Coupled with the approval of spot crypto ETFs, the South Korean government is building a more open and regulated crypto asset ecosystem. This systematic policy shift indicates South Korea’s repositioning in the global crypto market.

From ban to openness, South Korea is taking a cautious yet firm approach. By setting investment caps and restricting scope to the top 20 coins, regulators are signaling openness while maintaining risk controls.

Summary

South Korea’s end of a 9-year corporate crypto ban marks a significant shift in the crypto policy environment. The inclusion of 3,500 institutions, a 5% investment cap, and scope limited to the top 20 coins outline a relatively open yet orderly market framework.

The core significance of this decision is that institutional crypto investment has shifted from a forbidden zone to a legal option. While the restrictions are clear, the door is now open. The key follow-up will be how much actual capital these institutions allocate once the new regulations take effect (expected by the end of the year), and whether similar policies will be adopted in other regions globally.