Quick Summary
FSC has a higher level of KYC to fight money laundering on nonprofits and crypto exchanges.
Nonprofits were permitted to sell donated crypto, however, and only via domestically won exchange accounts.
In order to exchange user fees, the exchange may only do so with crypto liquidation entailing a high degree of internal controls.
Digital assets such as zombie coins and memecoins have new limits imposed to minimize volatility of the digital assets markets.
Legalization starts in June of 2025, according to the roadmap of South Korea that is going to implement new regulations that will permit institutional crypto trading.
South Korea Enters a Safe Crypto Space
South Korean Financial Services Commission (FSC) is increasing regulations to allow transparency and stability in the field of digital assets. Beginning June 2025, cryptocurrency exchanges and non-profit organizations will have to take measures to comply with improved Know Your Customer (KYC) rules and transaction checks.
This is during the larger plan of the country to permit an eventual institutional trading of cryptocurrencies and remove the current prohibition against domestic institutions that involve the trading of cryptocurrencies.
What Nonprofits Ought to Know
The new rules also allow non-profit organizations to sell virtual assets, although this will only be possible when the donations are brought in through domestic won exchange accounts. Additionally, they can only sell cryptocurrencies which have been listed in at least three South Korean won based exchanges — a step that instils liquidity, and credibility.
The Tougher Regulation of Exchange Relations
Crypto exchanges can liquidate the user fees they receive as digital assets, but going forward, they will be required to observe enhanced internal controls, including:
- A digital asset sale that shall be approved by the board of directors.
- Pre-disclosure requirements before executing any deals.
Moreover, trades are limited to the sale of cryptocurrencies in the top 20 in terms of capitalization established on KRW exchanges.
Addressing Zombie Coins and Memecoins
As with zombie coins and memecoins, that are known to cause instability in the market, the FSC is also standing in a strong position against them. According to the new best practices of transaction support:
- After this, memecoin transaction will only be allowed, provided that the coin indicated high transactions across the board.
- Zombie coins or the coins with low usage or rating might get delisted or deprived of support.
Constructing a Crypto Market That is Safer
By launching these rules, the FSC strives to protect the financial system against illegal operations and increase the faith of investors. According to a statement issued by the commission, the changes would enable the proper utilization of the virtual donated assets and save users, who can use them in risky digital properties.
The recent initiative of South Korea proves that it is forward-looking in terms of crypto adoption with an idea of maintaining a healthy balance between being innovative in blockchain technology and protecting its investors. These regulations are important in growing the crypto market in the area as institutions anticipate venturing into the digital asset space.