Korea lifts restrictions for professional investors to enter, thousands of institutions will reshape the crypto market landscape

After a nine-year ban, South Korea’s cryptocurrency market is about to迎來 a historic turning point. According to the latest policy guidelines announced by the Financial Services Commission (FSC), professional investors and listed companies have obtained legal permission to participate in digital asset trading, which will profoundly change the existing market ecosystem. Thousands of qualified corporate institutions are preparing to enter,预计 injecting tens of trillions of Korean won into the domestic crypto market. How will this policy shift reshape a market once dominated by retail investors? After the influx of institutional funds, can Korea’s crypto market escape the shadow of the “Kimchi Premium”?

The nine-year ban finally loosens, corporate institutions permitted to participate in crypto investments

In 2017, Bitcoin surged explosively in Korea, highlighting the “Kimchi Premium” phenomenon, with retail speculation surging and ICO chaos frequent. Faced with market out-of-control, Korean regulators acted swiftly, imposing a corporate ban that prohibited corporate institutions from engaging in crypto assets. This ban was once seen as necessary to curb speculative tendencies.

However, during the long nine-year regulatory period, authorities’ attitudes underwent a fundamental shift. As Bitcoin spot ETFs launched in major global markets, the status of crypto assets in institutional portfolios steadily solidified. Korean authorities realized that if they continued to adhere to old rules, they would miss the wave of financial innovation. The Korean government explicitly included digital assets in its 2026 Economic Growth Strategy, reflecting a major policy adjustment.

According to the FSC’s “Virtual Asset Market Promotion Plan” announced last February, regulators plan to allow some risk-tolerant professional investors to open real-name trading accounts. A recently released draft guideline further clarifies that approximately 3,500 listed companies and enterprises registered as professional investors under the Capital Markets Act will be the first institutional entities permitted to enter.

The new regulation limits investment to 5% of each company’s annual net assets, and the cryptocurrencies eligible are limited to the top 20 by market cap, focusing on liquid assets like Bitcoin and Ethereum. The specific rankings are determined based on data released biannually by DAXA (the alliance of Korea’s five major exchanges). FSC also implemented trading supervision measures, requiring large orders to be split to prevent market impact from institutional capital.

According to FSC statements, the final guidelines are expected to be announced between January and February 2026. If the guidelines are successfully implemented, corporate crypto trading is expected to officially commence before the end of the year.

Retail dominance will be rewritten, large-scale participation of professional investors

Korea’s crypto market has long been an unbalanced ecosystem. Due to the corporate investment ban, market trading has been entirely dominated by retail investors, while professional investors and institutional funds have been kept outside. Although this structure once effectively suppressed speculation, it also led to disconnection from the global institutional wave, limiting trading volume and activity.

In contrast, mature global crypto markets have long seen much higher institutional participation. Large funds, banks, insurance companies, and other professional investors have become the main driving forces. Korea’s long absence of institutional participation not only weakened the depth of the domestic market but also caused many institutions and high-net-worth funds seeking digital asset allocations to turn overseas for opportunities.

Now, with the ban lifted, this situation will undergo a fundamental change. Specifically, based on investment cap calculations, Korea’s internet giant Naver, which is acquiring the crypto exchange Upbit’s parent company, has a book equity of 27 trillion KRW, theoretically able to purchase about 10,000 Bitcoin. The entry of such large-scale professional investor funds will significantly enhance liquidity depth in the domestic market and attract Korean capital that previously watched from abroad to flow back. Industry estimates suggest that the potential inflow after lifting the ban could reach tens of trillions of Korean won.

Additionally, the open policy will stimulate the development of domestic crypto companies, blockchain startups, and related industries such as custody and venture capital. With professional investor participation, these enterprises will gain broader development space and market recognition.

Opportunities and practical challenges brought by institutional capital influx

The policy decontrol undoubtedly brings new development opportunities to Korea’s crypto market. The entry of institutional funds will promote expansion of local crypto companies, attract overseas crypto institutions to Korea, and elevate Korea’s status as an Asian crypto financial hub. Meanwhile, allowing legitimate coin holdings is also expected to facilitate cross-border blockchain project collaborations.

However, practical challenges cannot be ignored. On one hand, the 5% investment cap means the scale of institutional participation remains relatively conservative, making it difficult to generate aggressive market momentum. On the other hand, Bitcoin spot ETFs, as safer and more convenient investment tools, have already been launched in major global markets. Korea is also pushing for the launch of domestic spot ETFs, which will offer investors a simpler alternative to direct coin holdings, potentially reducing demand for direct institutional coin purchases.

Furthermore, the narrative momentum of the crypto market itself has waned. Since the second half of last year, Korea’s crypto market enthusiasm has continued to decline, with many investors shifting to stocks. As of early this year, Korea’s KOSPI index hit new all-time highs, with sectors like semiconductors, AI, shipbuilding, and defense—supported by more verifiable fundamentals—attracting investors more than crypto assets.

The Digital Asset Treasury (DAT) strategy, once highly anticipated, has cooled to a freezing point globally. Apart from pioneers like Strategy, most crypto treasury companies continue to suffer losses due to the “coin-stock double decline,” and investor enthusiasm has waned. Against this backdrop, the entry of professional investors will be difficult to replicate the past market prosperity.

Policy shift signals positive outlook, future focus points

Despite many challenges, Korea’s policy shift remains noteworthy. Breaking nine years of restrictions and officially opening the crypto market to professional investors signifies a re-evaluation by regulators of industry development. The implementation of detailed guidelines and legal improvements will directly influence the actual investment behaviors of institutions.

In the coming year, key points to watch include: when professional investors will truly initiate large-scale investments, the actual scale of institutional capital inflow, and changes in market liquidity and price volatility. Meanwhile, the crypto industry itself needs to seize opportunities, launch new narratives, and rekindle Korean investors’ enthusiasm—this is the most critical task at present.