South Korea’s people power party delays proposal to ease crypto restrictions

South Korea’s political landscape sees a significant shift as the ruling People Power Party postpones its plan to relax cryptocurrency regulations, including the lifting of the ban on local spot Bitcoin exchange-traded funds (ETFs). This decision comes amidst challenges in aligning with government and financial authorities on crypto policies.

The People Power Party, led by Yoon Chang-hyun, had initially crafted election promises to delay taxing crypto profits and permit domestic institutions to introduce spot Bitcoin ETFs. However, recent reports indicate a reversal of these pledges, with virtual assets being removed from the party’s policy priorities.

Government and financial authorities’ concerns

The delay in easing cryptocurrency restrictions is attributed to difficulties in reaching consensus with government and financial authorities regarding crypto policies. South Korea’s Financial Services Commission maintains a cautious stance, citing perceived investment risks associated with digital assets, despite the recent approval of spot Bitcoin ETFs by the United States Securities and Exchange Commission.

In contrast, the opposition Democratic Party has officially announced its crypto campaign promises, aligning with the earlier intentions of the ruling party. With South Korea’s general election looming on April 10, the stance of political parties on cryptocurrency regulations becomes a crucial point of contention.

The People Power Party considered proposals to delay taxation on virtual assets and permit corporate investments in digital assets. However, these plans were not finalized due to inadequate consultation with relevant ministries and concerns about potential substantial losses, particularly corporate involvement in digital assets.

Financial supervisory service’s initiatives

South Korea’s Financial Supervisory Service (FSS) is set to seek guidance from the U.S. SEC regarding spot Bitcoin ETFs. FSS chief Lee Bok-hyun outlined a 2024 business plan, including visits to key financial markets like New York in Q2, to discuss South Korean financial markets’ dynamics, particularly focusing on spot Bitcoin ETFs.

The indefinite delay in the proposal by South Korea’s ruling People Power Party to ease cryptocurrency restrictions underscores the complexities surrounding crypto regulations. As the nation navigates through these challenges, the stance of political parties and regulatory bodies will play a pivotal role in shaping the future of cryptocurrency adoption and investment in the country.