Main Points:
- Both major parties in the June 3, 2025, presidential election have pledged to legalize spot cryptocurrency ETFs, reflecting intense competition for the country’s sizeable crypto-investor demographic.
- Conservative candidate Kim Moon-soo emphasizes deregulation and middle-class asset growth, including approval of crypto spot ETFs as part of his “10 Major Promises.”
- Liberal frontrunner Lee Jae-myung prioritizes youth investment opportunities, proposing both spot ETF approval and a unified surveillance system to ensure safer crypto markets.
- Proposed reforms extend beyond ETFs, encompassing the repeal of restrictive banking rules, tokenized securities legislation (STOs), and stablecoin regulation aligned with global standards.
- Industry analysts anticipate that ETF legalization could catalyze institutional inflows, buoy domestic trading volumes, and position South Korea as a leading Asian crypto hub—provided legislative and regulatory hurdles are addressed in time.
Election Context and Crypto’s Rising Significance
South Korea’s upcoming presidential election on June 3, 2025, was triggered by the removal of former President Yoon Suk-yeol and has since become a critical battleground for competing visions of economic stimulus and technological leadership. With roughly 30% of the population—about 15.6 million people—actively trading cryptocurrencies as of November 2024, Korea boasts one of the highest crypto-adoption rates globally. As such, both the conservative People Power Party (PPP) and the main opposition Democratic Party of Korea (DPK) have strategically incorporated crypto policy into their platforms to capture the attention and votes of this influential demographic.
Bipartisan Spot ETF Pledges
Kim Moon-soo’s Crypto-Friendly Agenda
Kim Moon-soo, the PPP’s candidate and former labour minister, unveiled his “10 Major Promises” on May 12, positioning himself as a champion of middle-class asset growth. Among measures to introduce a cost-of-living-linked income tax system and expand tax-advantaged savings accounts, Kim pledged to expedite the approval of spot cryptocurrency ETFs within the year, aiming to enhance market transparency and broaden retail access to digital-asset investments. In parallel, the PPP’s April 28 emergency policy meeting stressed the need to repeal the restrictive “one exchange, one bank” rule, institutionalize corporate and institutional investor access to crypto markets, legalize tokenized security offerings (STOs), and adopt stablecoin regulations coherent with global best practices.
Lee Jae-myung’s Youth-Centered Crypto Vision
Lee Jae-myung of the DPK has similarly courted younger voters—who make up a disproportionately large segment of Korea’s crypto community—by pledging to authorize spot Bitcoin ETFs and to construct an integrated market surveillance system aimed at ensuring safer, more secure trading environments. Lee has also vowed to lower crypto trading fees to levels comparable with traditional equity markets, introduce interest-bearing savings programs for digital-asset holders, and explore won-denominated stablecoins to stem capital flight. These proposals underscore a shared recognition among candidates that ETF approval alone may not suffice without accompanying consumer protections and infrastructural upgrades.
Legislative and Regulatory Landscape
South Korea’s Financial Services Commission (FSC) and the Korea Exchange (KRX) have shown growing openness to ETF legalization. In October 2024, the government announced plans to regulate cross-border virtual-asset transactions starting in late 2025, signaling a broader shift toward formal crypto oversight. Meanwhile, KRX Chair Jeong Eun-bo publicly stated in January 2025 that the exchange would “explore” crypto spot ETF approval and security token offerings as part of its roadmap for 2025. Yet, regulators continue to debate whether digital assets satisfy criteria for underlying commodity status, a key consideration delaying formal Listings.
Market Impact and Investor Sentiment
Industry analysts predict that ETF legalization could unlock significant institutional capital flows into Korea’s crypto markets, mirroring trends in the U.S. and Europe where spot Bitcoin ETF launches have spurred daily inflows exceeding hundreds of millions of dollars. A recent CCN report highlighted that ETF policy has become a linchpin in election discourse, with both major candidates recognizing its potential to expand retail participation and legitimize the sector. Trading platforms and fund managers are already gearing up for potential ETF rollouts, with infrastructure upgrades and compliance frameworks under development. However, some institutional players caution that regulatory clarity on custody solutions and NAV computation for digital-asset ETFs must be in place before substantial capital commits.
Global Comparison: ETF Trends Worldwide
Several advanced markets have paved the way for spot crypto ETFs. The U.S. Securities and Exchange Commission’s approval of multiple Bitcoin ETFs in late 2024 ignited record inflows, while Canada’s earlier experience with Bitcoin and Ether ETFs demonstrated robust retail uptake. In Europe, spot crypto ETFs are under regulatory review, with guidelines emphasizing investor disclosures and risk warnings. South Korea’s push thus aligns with a broader global trend toward mainstreaming crypto investment through regulated exchange-traded vehicles. Comparatively, Korea’s demographic profile—with its tech-savvy youth and high smartphone penetration—positions it to potentially outpace peers in ETF adoption, provided the final legal and operational frameworks are enacted promptly.
Timelines and Implementation Challenges
The ambitious pledge to legalize spot ETFs “within the year” by both parties hinges on swift legislative amendments to the Capital Markets Act and FSC rulebooks. Parliamentary sessions concluding in late May may provide a narrow window to finalize necessary amendments, including definitions of digital assets as permissible ETF underlyings and custodial licensing requirements. Additionally, coordination between the FSC, KRX, and the Ministry of Strategy and Finance will be essential to align tax treatments—particularly in light of the bipartisan agreement to postpone cryptocurrency capital-gains taxation until 2027. Delays in any of these areas could postpone ETF launches into 2026, underscoring the need for post-election consensus regardless of the victor.
