Both of South Korea's top presidential contenders have pledged to introduce a won-backed stablecoin, relax existing rules, and legalize spot cryptocurrency exchange-traded funds (ETFs).
Since both candidates have run on pro-crypto platforms and promised to loosen laws and increase access to cryptocurrency, South Korea's crypto scene will benefit from either outcome of the country's presidential election.
On June 3, South Koreans will cast ballots in a snap election to choose a new president to succeed Yoon Suk-yeol, who was ousted from office and impeached for attempting to impose martial law in December.
The center-left Democratic Party's Lee Jae-myung is now dominating the polls. She faces up against Kim Moon-soo, the People Power Party's nominee and a fervent conservative.
In addition to allowing South Korea's $884 billion national pension fund to engage in cryptocurrencies, Lee has suggested legalizing spot crypto exchange-traded funds.
In an effort to reduce capital outflows and modernize the nation's financial system, he has also pushed for the broader issuance of a stablecoin backed by the South Korean won.
He stated at a May policy debate, "We must create a won-backed stablecoin market to stop national wealth from leaking overseas." "I will establish a secure investment environment to help young people accumulate assets and make future plans."
In order for cryptocurrency exchanges to provide fiat services, they must collaborate with authorized banks, which Lee also seeks to relax.
In an uncommon display of bipartisanship, Kim also supports Lee's idea and is in favor of legalizing spot cryptocurrency ETFs. Additionally, he has promised to relax rules and increase the use of cryptocurrencies.
With all of the major contenders endorsing pro-crypto legislation, Simon Seojoon Kim, CEO of Hashed Ventures, a venture capital firm based in Seoul, told Bloomberg that "the country's crypto investors face a clear win regardless of the election outcome."
According to a May 28 Gallup Korea poll, 49% of participants preferred Lee, while 36% stated they would vote for Kim.
Clear regulations are urgently needed.
The high level of retail cryptocurrency engagement in South Korea makes explicit regulation imperative. In July 2024, more stringent rules were put into place to enforce exchanges, including the possibility of life imprisonment for serious offenses.
Stricter listing requirements for exchanges and new rules for nonprofit cryptocurrency sales were finalized by the nation's Financial Services Commission on May 20.
In May, the Democratic Party of South Korea also established a Digital Asset Committee with the goal of creating regulations pertaining to cryptocurrencies and encouraging their expansion.
With daily trading volumes that occasionally surpass the major stock indices in the country and user counts that recently surpassed 16 million, South Korea boasts one of the most active cryptocurrency markets in the world.
