Leading political parties in South Korea are promising crypto-related incentives to secure voters’ support ahead of the country’s upcoming parliamentary elections.
According to a Bloomberg report on April 5, the opposition Democratic Party has vowed to remove restrictions on domestic and international exchange-traded funds (ETFs) directly holding crypto tokens, including United States Bitcoin ETFs. Following the approval of Bitcoin ETFs in January, South Korea’s securities regulator warned that local distribution of these ETFs could violate domestic laws.
“We’re going to allow the ETFs, whether domestic or overseas,” Democratic Party’s Hwanseok Choi told Bloomberg, citing the group’s manifesto.
Also hoping to capitalize on crypto voters, President Yoon Suk Yeol’s People Power Party pledged to delay taxes on digital assets’ profits, scheduled to take effect in 2025.
According to government statistics, nearly six million South Koreans traded crypto via registered exchanges in the first half of 2023, representing 10% of the country’s population. A total of 7% of election candidates own cryptocurrencies, according to official disclosures.
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Data from Korea Securities Depository shows crypto users have invested over $200 million in shares of US-listed firm MicroStrategy (MRST). The company’s massive exposure to Bitcoin has led some analysts to label it as “essentially a leveraged Bitcoin ETF.”
Despite politicians’ promises, South Koreans are bracing for tighter regulations on crypto assets. Local financial authorities plan to release new rules for token listings on centralized exchanges in the coming weeks.
According to local media reports, domestic exchanges will be prohibited from listing digital assets affected by hacking incidents until their root causes are determined. In addition, foreign digital assets will be listed on domestic exchanges only if a white paper or technical manual is available for local investors.
Furthermore, South Korea’s upcoming Virtual Asset Users Protection Act prohibits the use of “undisclosed important information” about crypto, market manipulation, and illegal trading. The crypto law will come into force on July 19, 2024. In February, the government issued an update to the Act, imposing significant fines and criminal penalties for violations, including a fixed-term imprisonment sentence of more than one year or fines of three to five times the amount of illegal profits.
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