South Korea Eases Corporate Crypto Rules, Allows 10% Investment Limit
South Korea is now allowing listed companies and professional investment firms to invest up to 10% of their equity capital...
Quick overview
- South Korea has increased the investment cap for listed companies and professional investment firms in digital assets from 5% to 10%, ending a nine-year ban on corporate crypto holdings.
- Experts warn that the new cap may limit corporate participation and complicate long-term crypto strategies due to market volatility.
- Companies are exploring digital assets for portfolio diversification and stablecoins for international trade, while regulators impose ownership limits on exchanges to ensure governance.
- Critics argue that ownership caps could hinder innovation and lead to legal challenges, but regulators remain committed to their cautious approach.
South Korea is now allowing listed companies and professional investment firms to invest up to 10% of their equity capital in digital assets, which is twice the previous 5% limit. This change, announced on January 11, ends a nine-year ban on corporate crypto holdings.
Still, industry experts believe the new cap could limit participation. Rich O, a corporate crypto adviser, said that market volatility and accounting practices might cause companies to go over the limit by accident.
- Companies might have to sell assets if prices change in order to stay within the limit.
- The cap makes it harder for companies to plan long-term crypto strategies.
- Authorities may be acting carefully because of MicroStrategy’s well-known corporate Bitcoin investments.
Rich O thinks the limit will likely go up as the market becomes more established.
Corporate Strategy and Diversification
Iris Park, co-founder of web3 consultancy DELV, said that South Korean companies are keen to use crypto to diversify their portfolios. “Diversification is vital for corporate survival amid volatile asset markets,” she said.
Many companies are looking into using stablecoins for international trade, seeing digital assets as important for staying competitive worldwide. However, authorities may focus on bigger financial strategies, like launching spot Bitcoin ETFs, instead of raising the investment cap right away.
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Key trends for companies:
- Using digital assets to diversify portfolios
- Stablecoins for cross-border transactions
- Adopting global financial practices
Exchange Ownership and Governance
South Korean regulators are also setting limits on exchange ownership, with major shareholders capped at 15 to 20 percent to prevent too much control over crypto infrastructure. FSC Chair Eog Weon Lee said that exchanges now act as public financial infrastructure and need stricter governance rules.
Critics say that ownership caps might slow innovation and create legal issues. The Digital Asset eXchange Alliance called the rules “excessive,” saying they are different from global standards and could reduce investment and fintech growth.
- Dunamu co-founder may need to sell 10% of shares (~3 trillion KRW)
- Naver’s potential full acquisition of Dunamu could be blocked
- This could lead to legal disputes and uncertainty in management.
Despite criticism, FSC Chair Lee remains committed to putting the shareholder cap in place, showing a careful but steady approach to bringing crypto into South Korea’s financial system.
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