Financial Holding Companies Can Acquire Up to 15% Stake in Fintech

Financial Services Commission 2025 Work Report

Gradual Allowance of Corporate Accounts for Virtual Assets

Acting President Choi Sang-mok received work reports from the Ministry of Trade, Industry and Energy, the Ministry of SMEs and Startups, the Financial Services Commission, and the Fair Trade Commission on the 8th. From left: Seong Tae-yoon, Presidential Office Policy Chief, Kim Byeong-hwan, Chairman of the Financial Services Commission, Oh Young-joo, Minister of SMEs and Startups, Acting President Choi. /Kim Beom-jun, Reporter

The regulation limiting financial holding companies' stake in fintech companies (previously 5%) will be relaxed to 15% for the first time in 25 years. The gradual allowance of corporate virtual asset accounts in Korean won is expected to enable universities and local governments to cash in donated cryptocurrencies.

The Financial Services Commission announced these key initiatives for this year at the '2025 Economic Sector 1 Key Issues Solution Meeting' on the 8th. As a measure to promote financial innovation and expansion, the commission proposed expanding financial holding companies' investments in fintech companies. Since the enactment of the Financial Holding Companies Act in 2000, the shareholding of non-subsidiary companies (less than 50% shareholding) by financial holding companies has been limited to 5%. The commission plans to increase this limit to 15% for fintech companies only. A representative from the commission explained, "This measure is expected to meet the demands of fintech companies seeking to attract investment while maintaining management control and financial holding companies seeking appropriate-sized investments for collaboration."

The commission also decided to allow fintech companies that are subsidiaries of financial holding companies to control financial firms. For example, fintech companies affiliated with financial holding companies can have 'robo-advisor consulting firms' as subsidiaries.

To manage household debt stably, the commission also proposed tightening loan conditions for jeonse (long-term deposit rental) funds. To curb indiscriminate 'gap investment' (purchasing homes with jeonse tenants), the guarantee ratio for jeonse loans will be reduced from 100% to 90% in the first quarter of this year. The plan is to uniformly lower the guarantee ratio of guarantee institutions to 90% to encourage stricter loan screenings by banks.

Allowing Coin Accounts Starting with Universities and Local Governments... ETF Introduction Remains Uncertain

Consideration of Allowing Corporate Real-Name Account Issuance... Jeonse Loan Guarantee Ratio Lowered to 90%

Financial authorities plan to gradually allow corporate virtual asset transactions starting as early as the first half of this year. Universities and local governments are expected to be able to cash in donated cryptocurrencies. Alongside this, the authorities will continue their strict household debt management policy this year. In the insurance sector, they plan to establish systems to support medical expenses and retirement funds.

○ Bitcoin ETF Still Approached with Caution

The Financial Services Commission announced in its '2025 Major Work Plan' on the 8th that it plans to gradually allow the issuance of real-name accounts in Korean won for corporate virtual asset exchanges through discussions with the Virtual Asset Committee.

Currently, to trade in Korean won on domestic virtual asset exchanges, one must obtain a real-name account linked to the transaction from a commercial bank. Although there is no explicit regulation preventing corporate account openings, banks restrict issuance based on the authorities' 'Anti-Money Laundering Guidelines.'

The commission plans to hold a meeting of the advisory body, the Virtual Asset Committee, this month to prepare a roadmap for gradual allowance starting with government and public institutions, universities, and other non-profit corporations. The plan is to expand the scope to include related businesses such as virtual asset exchanges, general companies, and financial firms.

Following the Virtual Asset User Protection Act implemented last year, the commission is also pushing for the second phase of virtual asset legislation, which includes regulations on the issuance and distribution of virtual assets. However, the commission maintains its conservative stance of allowing Bitcoin spot ETFs only after completing systems for stability and investor protection.

○ 3rd Stage Stress DSR to be Implemented in July

Financial authorities plan to manage the household debt growth rate within the growth rate of the gross domestic product (GDP) this year. To this end, they will first unify the guarantee ratio of guarantee institutions for jeonse loans to 90% in the first quarter.

Currently, the Housing and Urban Guarantee Corporation (HUG) and Seoul Guarantee Insurance provide 100% guarantees for jeonse funds. This has led to criticism that banks conduct loose loan screenings, making it easier for homeowners to find jeonse tenants, and ultimately increasing indiscriminate 'gap investment.' The commission believes that lowering the guarantee ratio will lead to stricter bank screenings and strengthen household loan management.

The financial authorities have decided not to pursue measures that break the existing household debt management principle of 'lending as much as can be repaid' for the time being. Some have argued for differentiating the total debt service ratio (DSR) for local household loans to revitalize the local construction economy or increasing the household loan limits of local banks.

Kwon Dae-young, Secretary-General of the Financial Services Commission, stated, "The application of the 3rd stage stress DSR, which reduces loan limits by adding a risk premium, is scheduled to be implemented as planned in July." The commission also plans to deduct a certain level from the loan limits of banks that exceeded their household loan targets last year.

○ Raising the Age Limit for Subscription to Indemnity Insurance

The commission also unveiled plans to improve systems for retirement preparation. They plan to allow money in Individual Savings Accounts (ISA), Individual Retirement Pensions (IRP), and pension savings to be withdrawn for medical expenses without burden. The move aims to ease the stringent conditions for mid-term withdrawals to simultaneously prepare for medical expenses and retirement.

If money is withdrawn from an ISA for medical expenses, the contribution limit will be immediately restored. Additionally, if medical expenses are paid with a card linked to the account, the purpose of the expenditure will be automatically recognized. The commission also plans to lower the threshold for subscription to indemnity insurance for the elderly and those with pre-existing conditions. The age limit for subscription will be raised from 70-75 to 90, and the coverage age will be increased from 100 to 110.

Reporters: Kang Hyun-woo, Choi Han-jong, Seon Han-gyeol hkang@hankyung.com