Cryptocurrency policies can master the electoral agenda of South Korea by 2025, since 15 million investors seek reforms

With more than 15 million investors in digital assets, almost a third of the country’s population, cryptocurrencies have become a decisive issue in elections.

The candidates compete to gain the confidence of this demographic group expert in technology promising to legalize the ETFs in the cash of cryptocurrencies and introduce Stablecoins backed by WON, policy changes that could radically remodel the financial panorama of the nation.

In the midst of record capital outputs and the demand for a clearer regulation, the two main candidates have aligned their platforms with the growing movement of cryptocurrencies.

But as political discussions are heated, skeptics wonder if these promises will go beyond political theater.

The cryptocurrency ETFs and access to pension funds dominate the debate

Lee Jae-Myung, of the Democratic Party, and Kim Moon-Soo, of the Popular Power Party, lead with proposals in favor of cryptocurrencies.

Both have pledged to legalize the funds quoted in Exchange cryptocurrencies in cash (ETF), currently prohibited in South Korea.

These instruments would allow indirect investment in assets such as Bitcoin through regulated securities.

At present, investment in cryptocurrencies in South Korea is almost completely driven by retail trade.

Institutional investment is restricted and national funds, such as the National Pension Service, cannot participate legally.

That could change with Lee’s proposal to open investment in digital assets to large institutions, provided that price stability conditions are met.

This marks a significant change in government thinking. Until now, South Korean authorities have maintained a prohibition of corporate exposure to cryptocurrencies.

However, the recent comments of the leaders of the Fintech industry, including the Korean Fintech Industry Association, suggest that a regulated ETF market could become a bridge between cryptocurrency and capital markets.

Lee promotes the law of stablcoins and digital assets backed by Won

Lee Jae-Myung is also promoting a stablecoin proposal aimed at reducing the dependence of the stablecoins linked to the USA such as USDT and USDC.

The Plan would introduce an alternative supported by WON by virtue of a proposal for the basic law of digital assets that is expected to be presented in Parliament this week.

The bill would define the legal status of digital assets, their issuance and circulation, and establish clear guidelines for Stablecoins projects.

According to the draft framework, the issuers would have to register in the Financial Services Commission and maintain reservations of at least 50,000 million Wones.

Recent figures add urgency to the debate. Between January and March 2025, Korean cryptocurrency exchanges registered 56.8 billion pounds sterling (40.8 billion dollars) in departures, almost half linked to stablecoins based on dollars.

Capital outputs have fed concerns about capital escape and exchange risk.

Lee’s policy seeks to build a national alternative, but critics argue that the stablcoins issued privately pose macroeconomic risks by allowing money creation outside the control of the Central Bank.

Analysts of the Capital Market Institute of Korea warn that these instruments can effectively serve as shadow banks.

Regulatory repression is directed to exchanges without a license

At the same time, financial regulators are intensifying scrutiny.

The financial supervision service reported that 52.5% of suspicious cryptocurrency operations marked between July and December 2023 involved investors between 20 and 30 years.

This demographic group forms the core of the voter base to which politicians favorable to cryptocurrencies are directed.

Regulators have also invoked the law of protection of virtual assets users to propose criminal sanctions for unfair commercial practices.

On the other hand, South Korea recently forced Google to block 17 unregistered foreign exchanges, reinforcing its hard position on the protection of investors.

Together with the basic law of digital assets, the Government plans to publish phase two of its regulatory cryptocurrency framework in the second half of 2025, expanding supervision and establishing a basis for digital finances that comply with the standards.