Quick Summary
- FSC enforces stricter KYC rules for nonprofits and crypto exchanges to combat money laundering.
- Nonprofits allowed to sell donated crypto, but only through domestic won exchange accounts.
- Exchanges can liquidate user fees paid in crypto but must follow strict internal controls.
- Zombie coins and memecoins face new restrictions to reduce digital asset market volatility.
- New laws take effect from June 2025, aligning with South Korea’s plan to legalize institutional crypto trading.
🇰🇷 South Korea Moves Toward Safer Crypto Ecosystem
The Financial Services Commission (FSC) of South Korea is stepping up its regulatory framework to ensure transparency and stability in the digital asset market. Starting June 2025, non-profit organizations and cryptocurrency exchanges will be required to adhere to enhanced Know Your Customer (KYC) standards and transaction verifications.
This comes as part of the country’s broader strategy to gradually allow institutional trading of cryptocurrencies and lift the existing ban on local institutions engaging in crypto trading.
What Nonprofits Need to Know
Under the new rules, non-profit organizations can now sell virtual assets, but only if the donations are received via domestic won exchange accounts. Furthermore, they are limited to selling cryptocurrencies that are listed on at least three South Korean won-based exchanges—a move that ensures liquidity and credibility.
Stricter Oversight for Exchanges
Crypto exchanges are permitted to liquidate user fees paid in digital assets, but must now implement stricter internal controls, such as:
- Approval by the board of directors for digital asset sales.
- Pre-disclosure obligations before carrying out any transactions.
In addition, exchanges are restricted to selling cryptocurrencies that rank in the top 20 by market capitalization on KRW exchanges.
Tackling Zombie Coins and Memecoins
The FSC is also taking a firm stance against zombie coins and memecoins, which are known to contribute to market instability. As per the new transaction support best practices:
- Memecoin transactions are only permitted if the coin shows a significant number of overall transactions.
- Zombie coins, or those with minimal activity or value, may be delisted or denied support.
Building a Safer Crypto Market
With the rollout of these regulations, the FSC aims to safeguard the financial system from illicit activities and boost investor confidence. A statement from the commission emphasized that these changes would ensure the proper use of donated virtual assets and protect users from high-risk digital assets.
South Korea’s latest move demonstrates its commitment to responsible crypto adoption, balancing innovation with investor protection. As institutions prepare for entry into the digital asset space, these regulations mark a critical step in maturing the crypto market in the region.