"Corporate Investment in Virtual Assets Allowed... Last Chance for the Industry" [The Korea Economic Daily Koala]

Kim Min-seung's ₿fficial

"Corporate Investment in Virtual Assets Allowed... Last Chance for the Industry" [The Korea Economic Daily Koala]

Corporate Accounts for Virtual Assets Finally Allowed

'Corporate accounts', a long-awaited wish of the virtual asset industry, are finally being allowed. On February 13, the Financial Services Commission held the 3rd Virtual Asset Committee meeting and announced that corporate virtual asset trading would be gradually allowed in stages. In the first half of this year, law enforcement agencies, designated donation organizations, and educational institution corporations will be allowed to sell, and from the second half, listed companies and professional investors will be allowed to trade.

Korean corporations have been principally prohibited from using virtual asset exchanges. While corporate access to the won market for virtual assets was officially blocked at the bank level since the implementation of the Special Financial Information Act amendment in 2021, in reality, financial institutions and investment companies were expelled from the domestic virtual asset market when the government's joint emergency measures in 2017 'prohibited virtual asset holding, purchase, collateral acquisition, and equity investment to prevent financial institutions' new investments from stimulating speculative psychology'.

This measure represents a change in stance and follow-up to the 2017 emergency measures that completely blocked corporate and institutional virtual asset trading. It's welcome news for those who have consistently advocated for corporate accounts to prevent price distortion in the domestic virtual asset trading market, provide a safer trading environment for individual investors, and secure global competitiveness while preventing the collapse of Korea's blockchain ecosystem.

The Financial Services Commission's Careful Consideration is Evident

However, upon careful consideration, it's not entirely cause for celebration. The FSC's press release explains the 2017 measures as "prohibiting corporate virtual asset trading to mitigate overheated speculation, considering significant concerns about money laundering and market overheating," and cites the background for this measure as "the need to allow corporate market participation in terms of overseas cases where virtual asset ecosystems are formed around corporations, increasing domestic corporate demand for new businesses like blockchain, and improving global regulatory consistency."

Furthermore, the FSC states that "gradual and phased permission is desirable to minimize related risks and prevent market confusion," emphasizing that this measure is not an unconditional full permission but a very cautious conditional allowance, stating that "priority for permission will be set by corporation based on virtual asset relevance and expected risks, with sufficient safeguards needed for preventing money laundering and conflicts of interest."

In other words, the FSC still has concerns about money laundering and market overheating, and remains cautious about virtual asset market risks spreading to the institutional financial sector. However, considering the U.S. market approval and record success of Bitcoin spot ETFs in early 2024, and the strong pro-virtual asset movements by governments worldwide centered on the U.S. after Trump's inauguration in 2025, they are piloting corporate virtual asset investment while preparing various safeguards in consideration of global consistency and domestic demand.

The Industry's Original Sin

While the 2017 emergency measures nearly killed the domestic blockchain industry, I believe they were unavoidable at the time. Back then, it was common to hear that 'all meeting places from Gangnam Station to Samsung Station along Teheran-ro were filled with coin MLM company meetings.' People without technology, capital, or even plans promoted hastily made websites and whitepapers to receive 'investments' from middle-aged and elderly people, and many of these coin businesses disappeared after receiving investments.

Exchanges are also greatly at fault. One exchange had its bank deposits completely suspended due to a voice phishing incident. Afterwards, it spent a long time in self-reflection, applying stricter deposit, withdrawal, and balance reflection rules compared to other exchanges.

Around the same time, numerous domestic exchanges listed poor-quality coins created solely for post-listing pumping, and earned massive trading fee income while turning a blind eye to price manipulation by unqualified 'market makers (MM)' contracted with issuers. When issuers cashed out pumped coins and the 'charts died,' exchanges delisted these coins citing 'circulation volume violations' and erased the 'dead' charts. This repeated occurrence at multiple exchanges created numerous victims. This is why the 2017 government emergency measures included a 'complete ban on ICOs (coin offerings).'

In this process, exchange executives and employees were involved in 'listing corruption,' receiving large sums from coin issuers for listings, with some being criminally punished or currently under trial.

Even without virtual asset-related laws, the aforementioned fake investment solicitation and listing corruption could be prosecuted as cash transactions were proven. There are far more suspected cases of actions exploiting legal blind spots - trading activities like price manipulation that would certainly have been detected and heavily punished in the capital market. Even after the Virtual Asset User Protection Act took effect on July 19, 2024, unexplainable price fluctuations still occur. Some coins surge in volume and price at 9 AM without any positive news. The practice of listing coins with questionable business sustainability, focusing only on short-term popularity, hasn't disappeared. It's suspected that foreign and corporate funds are still using domestic individual accounts to access exchanges.

We Must Do Well

As an industry insider, I'm bringing up these embarrassing industry stories because this is the one and only chance for the domestic virtual asset industry to survive. Virtual asset ETFs are growing daily in the U.S. market, and 'Crypto President' Trump is implementing his promise to make the U.S. the 'world capital of virtual assets' and a 'Bitcoin superpower.' He's appointing pro-virtual asset personnel as SEC and CFTC chairs, Treasury Secretary, and Commerce Secretary, and driving strong initiatives by creating a White House working group to develop a new regulatory framework within 180 days. The U.S., with its major crypto companies and massive capital already prepared, is innovating its regulatory environment to lead a virtual asset revolution worldwide and secure hegemony. Under U.S.-led order, virtual assets will become an essential element in finance and daily life.

Against this backdrop, our government has given the domestic market an opportunity for 'gradual and phased pilot testing' despite concerns and anxieties. If someone abuses this and incidents occur, the government will inevitably return to a complete blockade stance, and Korea's virtual asset industry, including exchanges, will die from that point. While five virtual asset won exchanges survived the 2017 measures, with domestic virtual asset investors already moving en masse to foreign exchanges, even the exchanges won't survive if new regulations are implemented.

We must do well. Exchanges, domestic corporate investors allowed to trade, and individual investors currently active in the market must all operate properly in the light, not in the shadows. Legal blind spots should be avoided, not exploited. Trust is bidirectional. Let's not kick away the trust the government has difficultly extended. This is my earnest request to the industry as an industry insider.

"Corporate Investment in Virtual Assets Allowed... Last Chance for the Industry" [The Korea Economic Daily Koala]

About Kim Min-seung, Head of Korbit Research Center...

He is a founding member and head of the Korbit Research Center. He works to explain complex events and concepts in the blockchain and virtual asset ecosystem in an accessible way, helping people with different perspectives understand each other. He has experience in blockchain project strategy planning and software development.

▶This article is an external columnist piece introduced to provide various perspectives to cryptocurrency investment newsletter subscribers and does not represent the position of The Korea Economic Daily.

Reporter Jo Mi-hyun mwise@hankyung.com