A Review of the Korean Cryptocurrency Market Regulations in 2026

There is a seat belt but no car

Korea's virtual asset regulation is based on a "preemptive regulation" structure. This "preemptive regulation" structure has persisted through the IMF foreign exchange crisis and the global financial crisis, and continues to apply to the web3 industry. Accordingly, over the past decade, the Special Financial Transactions Act (2021) and the User Protection Act (2024) have focused on investor protection-focused regulations.

The recently passed STO amendments are attempting to achieve limited institutional integration, and the following four key discussions are underway.

1. Spot ETFs: The current administration is continuously considering introducing virtual asset spot ETFs in its presidential campaign pledges and economic growth strategy.

2. The Korean Won Stablecoin: The Financial Services Commission maintains an industrial policy perspective that allows fintech participation, while the Bank of Korea maintains a monetary stability perspective that advocates a 51% bank consortium (the most acute issue).

3. Virtual Asset Taxation: Taxation of individual virtual asset transactions has been delayed for several years, but is expected to be fully implemented in 2027.

4. Exchange share limits: The Financial Services Commission's proposal sparked a debate, and the Digital Assets Association (DAXA) officially expressed its opposition.

The most disappointing aspect of this report is that the exchange's focus on "transaction intermediation" has fundamentally blocked its expansion into custody, brokerage, and ICO platforms. Unlike Coinbase, which has evolved into a comprehensive crypto finance platform, Upbit remains solely an "exchange," failing to generate a trickle-down effect for the development of the domestic ecosystem.

In short, while Korean regulations succeeded in "accident prevention," they failed to "promote industry development." It's like having a seatbelt but no vehicle to ride in. Despite being the most active participant in the global Web3 ecosystem, Korea has failed to foster the ecosystem, resulting in a market but no industry.

Even now, we need to transition to a regulatory leader where investor protection and industrial innovation coexist through close dialogue with industry.

Key regulations in Korea you need to know in 2026. From discussions about introducing spot ETFs to the conflict between the Financial Services Commission and the Bank of Korea over won-denominated stablecoins, check out the key issues you absolutely must watch in the Korean market in 2026.

📥 Download the 2026 Key Regulatory Report

The basic tenet of Korean financial regulation = "ex-ante regulation."

• Korea's tendency toward ex ante regulation was formed during the 1997 IMF foreign exchange crisis and the 2008 global financial crisis.

• Through two financial crises, the government recognized the financial market as a system to be managed and controlled, rather than an area to be left to its own devices.

A culture that blames government for failure

• Within the state-led growth model, a structure has been formed in which failure is perceived as a failure of government management rather than an individual's judgment.

• In the event of a financial accident, the government is held responsible for the damage, which directly leads to regime risk and political burden.

• The government is strengthening its regulatory approach to limiting citizens' choices in advance to avoid post-facto responsibility.

From investor protection to limited industry opening

• Over the past decade, Korea's virtual asset regulation has focused on preventing accidents and protecting users, rather than fostering the industry.

• Although the STO bill is attempting to limit incorporation, it is limited to limited openings such as the Korean Won stablecoin.

1) Special Act: Limiting the trickle-down effect of exchanges

• The Special Financial Transactions Act, a law focused on exchange regulation, was revised in 2021 due to hacking and money laundering incidents at small and medium-sized exchanges.

• For Korean Won transactions, a real-name bank account partnership was essential, but due to the negative public sentiment toward the industry at the time, small and medium-sized exchanges failed to establish partnerships, leading to a series of closures.

• This led to the formation of a monopoly structure among the five major exchanges, including Upbit and Bithumb. Subsequently, business licenses were restricted to "trading" activities, limiting the trickle-down effect of the ecosystem and failing to create a native Web3 ecosystem.

  

Key regulations in Korea you need to know in 2026. From discussions about introducing spot ETFs to the conflict between the Financial Services Commission and the Bank of Korea over won-denominated stablecoins, check out the key issues you absolutely must watch in the Korean market in 2026.

📥 Download the 2026 Key Regulatory Report

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