Cryptocurrency price display board. (Image courtesy of Yonhap)
SEOUL, June 4 (Korea Bizwire) — As South Korea prepares to usher in a new administration following the 21st presidential election, the nation’s digital asset industry is poised for a potential regulatory breakthrough, with both leading candidates expressing support for broader integration of blockchain-based financial products into the legal framework.
Both Lee Jae-myung and Kim Moon-soo — the top contenders in the 2025 race — have pledged to accelerate legislation surrounding tokenized securities (Security Tokens), spot cryptocurrency ETFs, and stablecoins. Market watchers say the election could prove a turning point in bringing these products into the financial mainstream.
Among the digital asset categories, security tokens are expected to benefit most immediately. These blockchain-powered digital securities allow for fractional ownership of alternative assets like artwork or real estate.
While technically considered “non-standard securities,” security tokens have faced limited issuance and circulation due to the lack of clear legal definitions in existing capital market laws.
A bipartisan bill to revise the Capital Markets Act and the Electronic Securities Act — including provisions for tokenized securities — has already been agreed upon by lawmakers but was delayed by last year’s political turmoil. Both Lee and Kim have publicly committed to finalizing the legal framework as a policy priority.
Major brokerage firms such as NH Investment & Securities, Mirae Asset Securities, and Hana Securities are preparing to enter the security token business, alongside tech firms and fractional investment startups.
Industry analysts expect the ecosystem to rapidly expand, especially as tokenized securities open the door to innovative offerings linked to assets like IP rights, precious metals, and data infrastructure.
The legalization of spot cryptocurrency ETFs is also gaining traction. These funds, which track the prices of assets like Bitcoin and Ethereum, have been introduced in the U.S. and Hong Kong, and are under review in Japan.
In South Korea, the funds remain illegal under current rules, which do not recognize cryptocurrencies as underlying assets and lack a corresponding tax framework. Nonetheless, both presidential candidates have voiced strong support for their introduction.
Meanwhile, stablecoins — cryptocurrencies pegged to fiat currencies like the U.S. dollar or Korean won — are emerging as another focal point. These tokens are increasingly used for cross-border payments and domestic transactions, with South Korean crypto exchanges processing over 57 trillion won ($42 billion) in dollar-based stablecoins in the first quarter of 2025 alone, according to Bank of Korea data.
Lee has pledged to explore use cases for won-pegged stablecoins, while Kim has promised to devise a regulatory structure. However, stablecoins pose a greater challenge for integration due to their potential use as currency substitutes and the risk of circumventing capital controls — a key concern for the central bank.
A digital asset industry insider cautioned that while momentum is building, regulatory risks remain: “Spot crypto ETFs still face volatility and legal infrastructure issues, and stablecoins are at the center of a regulatory tug-of-war between financial authorities and the central bank. The legislative push for security tokens may serve as the gateway for broader reforms.”
Observers say the post-election policy direction will be critical in determining the pace and scope of digital asset integration into South Korea’s financial system.
M. H. Lee (mhlee@koreabizwire.com)
