Main Points：
- Both of South Korea’s leading parties have pledged to approve cryptocurrency spot ETFs if elected, signaling cross-party momentum on digital asset regulation.
- The conservative People Power Party’s candidate, Kim Moon-soo, proposes a “one-exchange, one-bank” rule repeal, spot ETF legalization, and broader crypto reforms within 2025.
- Democratic Party front-runner Lee Jae-myung is promising to establish a safe investment environment for youth, including spot ETF approval, lower transaction fees, and an integrated monitoring system.
- Lawmakers from both camps have agreed to postpone capital gains taxation on crypto until 2027 to support market development and investor confidence.
- The election’s crypto-focus aligns South Korea with global trends, as investors look to regulated instruments akin to U.S. spot Bitcoin ETFs and global stablecoin standards.
Bipartisan Drive for Spot Crypto ETFs
South Korea’s upcoming snap presidential election on June 3, 2025, marks an unprecedented moment in the nation’s approach to cryptocurrency regulation. Both the ruling People Power Party (PPP) and the main opposition Democratic Party have made crypto spot ETF approval a centerpiece of their campaign platforms. This cross-party consensus is especially notable given that, until recently, local regulators classified crypto assets as unsuitable as underlying ETF holdings. The PPP’s emergency committee meeting on April 28 laid out a sweeping set of measures—including the repeal of the “one-exchange, one-bank” rule, institutionalization of corporate and institutional crypto trading, and spot ETF legalization by year-end 2025. Meanwhile, the Democratic Party has echoed these commitments, highlighting the need to build a secure investment framework for a generation of tech-savvy investors.
This bipartisan push reflects growing political recognition of cryptocurrency’s popularity among Korean youths—approximately 15.6 million South Koreans, or nearly 30% of the population, traded digital assets as of November 2024. Faced with this reality, both camps are vying for the sizable crypto-investor vote, making regulatory liberalization a strategic imperative.
The People Power Party’s Reform Agenda
Repealing the “One-Exchange, One-Bank” Rule
A hallmark of the PPP’s proposal is the abolition of the “one-exchange, one-bank” framework, which currently forces each crypto exchange to partner exclusively with a single commercial bank for fiat settlements. Critics argue this rule stifles competition and concentrates power among incumbent financial institutions. By rescinding it, the PPP aims to diversify banking partnerships, facilitate smoother fiat flows, and bolster market resilience.
Accelerated Spot ETF Legalization
The ruling party pledges to greenlight spot cryptocurrency ETFs—starting with Bitcoin and expanding to other major tokens—by the end of this year. This move is designed to offer regulated, exchange-traded vehicles for retail and institutional investors, mirroring the U.S. Securities and Exchange Commission’s January 2025 approval of multiple spot Bitcoin ETFs. Proponents argue that such products will increase transparency, bolster liquidity, and draw institutional capital into South Korea’s digital asset ecosystem.
Tokenized Securities and Stablecoin Regulation
In addition to spot ETFs, the PPP has vowed to legalize Security Token Offerings (STOs) and introduce stablecoin regulations aligned with global best practices. By codifying tokenized securities frameworks and adopting internationally consistent stablecoin standards, policymakers intend to foster innovation while managing systemic risk.
The Democratic Party’s Crypto Vision
Creating a Safe Investment Environment
On May 6, 2025, Democratic Party candidate Lee Jae-myung unveiled a pledge to establish an “integrated monitoring system” for virtual assets, ensuring real-time oversight of trading activities and reinforcing investor safeguards. Lee stressed that many young Koreans face structural barriers to wealth accumulation, arguing that a secure, regulated crypto market can serve as a new avenue for building assets and planning for the future.
Lowering Transaction Fees
Pointing to disparities between stock and crypto trading costs—where crypto fees can reach 0.2% versus stock trading’s approximate 0.015%—Lee has proposed fee reductions to parity with equities markets. Lower costs are expected to widen market participation, particularly among smaller retail investors, and to bring South Korea in line with competitive fee structures overseas.
Yen-Based Stablecoin and Youth Programs
Lee also advocates for the creation of a won-denominated stablecoin market to stem potential capital outflows—a measure aimed at retaining liquidity within domestic channels. Complementing this, he proposes new interest-bearing savings programs and youth-targeted financial planning services to further democratize access to investment tools.
Tax Policy and Legislative Harmony
In a rare display of legislative unity, both major parties have agreed to delay the implementation of a planned capital gains tax on cryptocurrencies—initially scheduled for January 2025—until 2027. This two-year extension stems from a December 2024 parliamentary amendment to the Income Tax Act, which also abolished the Financial Investment Tax (FIT) on domestic equity gains. By pausing crypto taxation, lawmakers seek to avert market disruption and provide investors with a clearer regulatory horizon.
Global Context and Investor Implications
South Korea’s shift toward spot ETF approval echoes a global trend in which governments increasingly recognize crypto assets as mainstream financial instruments. The U.S. landmark approval of spot Bitcoin ETFs in January 2025 paved the way for heightened institutional adoption and set a benchmark for regulated crypto products. South Korea’s alignment with these measures may attract international capital flows, boost custodial infrastructure, and prompt local exchanges to enhance compliance and security standards.
Moreover, by legalizing tokenized securities and stablecoins, South Korea positions itself to participate in the next frontier of digital finance—encompassing decentralized finance (DeFi), programmable assets, and cross-border payments. Investors seeking novel yield opportunities may find enhanced diversification benefits through regulated crypto ETFs, while practitioners can explore blockchain’s practical applications in asset management, trade finance, and digital identity.
Conclusion
The June 3, 2025, South Korean presidential election represents a turning point in the nation’s engagement with digital assets. With both major parties pledging spot ETF legalization, fee reductions, and stablecoin frameworks, South Korea looks poised to adopt one of the most progressive crypto regulatory regimes in Asia. For investors and blockchain practitioners, these developments offer new conduits for portfolio diversification, institutional-grade products, and a more secure environment for innovation. As the election approaches, market participants should monitor policy finalization, exchange readiness, and legislative follow-through—factors that will ultimately shape South Korea’s digital asset landscape for years to come.
