South Korea New Crypto Rules Target Exchanges and Nonprofits

South Korea New Crypto Rules to Prepare for Institutional Adoption

South Korea is taking big steps to tighten its crypto regulations before allowing more companies and institutions to enter the digital asset space. Starting in June, new rules will take effect that will impact both cryptocurrency exchanges and nonprofit organizations (NPOs). These regulations are part of the nation’s strategy to expand its cryptocurrency market towards major players and keeping risks like money laundering under scrutiny. 

New Rules for Crypto Donations and Sales

The biggest financial regulatory authority of South Korea called the Financial Services Commission has announced that nonprofit associations will be permitted to sell digital currencies. That they got through sponsors or as donations. Although they need to abide by the new requirements. 

To qualify, nonprofit organisations of South Korea are required to have a minimum of five years of audited financial books. They also need to establish a “Donation Review Committee” to ensure the donations organisations get are safe and legal. All digital currency donations must be converted to Korean won through verified exchanges. The liquidation (or sale) of those assets must happen right away.

Only cryptocurrencies listed on at least three major Korean won (KRW) exchanges will be allowed for donation purposes. This rule projects to make sure that nonprofits only deal with popular and widely traded tokens. 

Crypto Exchanges Face Limits Too

Crypto exchanges are also impacted by the new set of regulations. They will be permitted to sell digital currencies like Bitcoin and Ethereum that users have paid as fees. The condition is that the money earned from such sales must only be incurred for operational costs. The amount sold needs to be within a daily limit, generally less than 10% of the total planned sale.

To avoid any unfair practices, platforms are not allowed to sell tokens on their own platforms. With that, they can only sell the top 20 tokens, which has to be determined by market value, on the 5 won-based exchanges.

The FSC is also making alterations to how tokens are listed. Tokens with less volume or undefined purpose, generally called “zombie tokens” or “memecoins”, will be under more scrutiny. Tokens required to meet particular trading volume. Along with it community activity standards to stay listed, otherwise they could be removed. 

Focus on KYC and Anti-Money Laundering

All donations and digital currency transactions must go through verified Korean bank accounts. The responsibility for verification will fall on banks, exchanges, and the nonprofits themselves.

June onwards, nonprofit organisations and crypto exchanges can apply for accounts with real-name. This means they’ll need to link crypto activities with real identities. Later this year, these real-name accounts will also be offered to professional investors and listed companies.

Bigger Plans for Crypto in South Korea

These changes are happening as South Korea prepares to allow corporations to buy, sell, and hold digital assets. The government had earlier banned institutional cryptocurrency trading, but that restriction is now being lifted.

There’s also growing support for crypto from politicians of South Korea. The Democratic Party member Lee Jae-myung expresses interest in introducing a stablecoin related to the Korean won. His thought is to lower the dependency of South Korea on foreign-backed digital currencies like USDT and USDC. His rival, Kim Moon-soo from the ruling party, also supports launching crypto ETFs.