Korea seeks to ease fintech ownership, crypto regulations

South Korea’s top financial regulator has proposed loosening restrictions on financial holding companies’ ownership of fintech platforms from the current 5% to 15% in the first such shift since introducing the ownership limit in 2000.

The Financial Services Commission (FSC) is also moving to allow companies and non-corporate organizations to trade cryptocurrencies at home, starting as early as the first half of this year.

On Wednesday, the FSC unveiled a package of such policy initiatives for 2025.

RULES OVER FINTECH OPERATORS

Under the current law, financial holding firms are restricted to a maximum 5% stake in a fintech platform unless it is its subsidiary of which it controls more than 50%.

“(A loosening in their ownership limits) will meet the needs of both fintech companies seeking to attract investment, while keeping management rights and financial holding firms who want to collaborate with fintech companies through an appropriate level of investment,” said an FSC official.

For fintech units classified as subsidiaries of holding firms, the regulator seeks to allow them to control other financial services firms like robot advisers that provide customized financial advice and investment services online.
 

CRYPTOCURRENCY TRADE

Investors in the domestic digital coin market are required to open Korean won-denominated accounts under their real name at a local bank.

The rules virtually blocked institutions' digital currency trading at home because local banks were reluctant to open corporate accounts linked to crypto investments for fear of breaking anti-money laundering guidelines.

A relaxation in the rules, to be introduced in phases, will enable companies, university foundations and municipal governments to convert digital money into physical cash in the country.

Meanwhile, the FSC said it will continue to ban local investors’ trading of spot-bitcoin exchange traded funds, citing a lack of investor protection systems.

In 2024, South Korea enacted legislation on virtual assets to bring cryptocurrency markets under regulatory control for investor protection after a series of alleged cryptocurrency fraud cases in recent years.

It is now drawing up follow-up regulatory steps concerning digital asset issuance and circulation.

Write to Hyun-Woo Kang at hkang@hankyung.com
 


Yeonhee Kim edited this article.