South Korea Freezes Crypto Regulations in Wake of Political Crisis

The South Korean National Assembly has decided to pause discussions on crypto-related regulations due to ongoing political turmoil. The suspension comes in the aftermath of martial law and impeachment proceedings against the current president.

A recent report from Chosun revealed that the National Assembly has deprioritized virtual asset policies. An unnamed Assembly official stated, “All crypto-related policies have been buried under the impeachment issue, making it impossible to expect a vote.” This indefinite postponement likely means discussions will not resume until at least the first half of 2025.

Significant measures like the prohibition on initial coin offers (ICOs), the issuing of real-name accounts for cryptocurrency trading, the inclusion of cryptocurrencies on corporate balance sheets, the legalization of Bitcoin spot ETFs, and securities token offerings are among the bills that have been delayed. The timetable for these legislative measures, which were intended to influence South Korea’s cryptocurrency scene, is currently unclear.

The bill to extend the crypto tax law’s application until 2027 was one that just missed a deadline. On December 10, the last day of its regular session, the National Assembly discussed and approved the motion, delaying the implementation of the tax law until January 1, 2025.

Financial Authorities Shift Focus

Similarly, the South Korean Financial Services Commission (FSC) has shifted its priorities. While the FSC recently completed corporate account guidelines based on advice from the Virtual Asset Committee, implementation may be delayed. Instead, financial authorities plan to focus on traditional markets, including stocks, bonds, and short-term funds, amid the political instability.

The lack of progress on crypto regulation has frustrated industry stakeholders, who have long demanded clearer guidelines and stronger protections for traders and companies. Critics warn that South Korea risks losing its competitive edge to nations like the U.S. and Hong Kong, which are accelerating their regulatory efforts. The uncertainty could drive local crypto firms and investors to relocate overseas.