{"id":151872,"date":"2026-10-30T10:02:49","date_gmt":"2026-10-30T10:02:49","guid":{"rendered":"https:\/\/www.legal500.com\/guides\/?post_type=comparative_guide&#038;p=151872"},"modified":"2026-10-30T11:04:46","modified_gmt":"2026-10-30T11:04:46","slug":"south-korea-blockchain-crypto-assets","status":"publish","type":"comparative_guide","link":"https:\/\/www.legal500.com\/guides\/chapter\/south-korea-blockchain-crypto-assets\/","title":{"rendered":"South Korea: Blockchain &amp; Crypto Assets"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-151872","comparative_guide","type-comparative_guide","status-publish","hentry","guides-blockchain-crypto-assets","jurisdictions-south-korea"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Bae, Kim &amp; Lee LLC<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/07\/BKL-logo_Eng_vertical-type.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Bae, Kim &amp; Lee LLC<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/07\/BKL-logo_Eng_vertical-type.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Blockchain &amp; Crypto Assets laws and regulations applicable in South Korea<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please provide a high-level overview of the blockchain market in your jurisdiction. In what business or public sectors are you seeing blockchain or other distributed ledger technologies being adopted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>South Korea has a highly active crypto asset trading market, and blockchain and distributed ledger technology (\u2018DLT\u2019) are being adopted across a wide range of industries.<\/p>\n<p><strong>Virtual Asset Service Providers<\/strong><\/p>\n<p>Virtual asset service providers (\u2018VASPs\u2019), including crypto asset exchanges, are regulated under the Act on Reporting and Using Specified Financial Transaction Information (the \u2018AML Act\u2019), which imposes obligations to report to the Korea Financial Intelligence Unit (\u2018KoFIU\u2019), and the Virtual Asset User Protection Act (the \u2018VAUPA\u2019), which came into effect in July 2024 and imposes user protection and market conduct requirements. Major exchanges such as Upbit (operated by Dunamu), Bithumb, Coinone and Korbit operate KRW-based trading platforms, each of which is required to maintain a real-name verified deposit account with a domestic bank.<\/p>\n<p>Korean financial authorities have maintained, and continue to maintain, a policy of separating the traditional financial sector from the virtual asset sector, known as <em>geum-ga bunri<\/em>. While financial institutions have been permitted to participate in the virtual asset sector in certain limited respects, including by acquiring equity interests in crypto asset exchanges such as Korbit, Dunamu and Coinone, they are generally not permitted under applicable law and regulatory policy to engage directly in virtual asset-related businesses (including virtual asset custody by banks).<\/p>\n<p><strong>Security Token Offerings<\/strong><\/p>\n<p>The Financial Services Commission (the \u2018FSC\u2019) has taken steps to institutionalise security tokens (<em>tokeun jeunggwon<\/em>) which the FSC has defined as the digitalisation of securities under the Financial Investment Services and Capital Markets Act (the \u2018FSCMA\u2019) using DLT. The National Assembly has passed amendments to the FSCMA and the Act on Electronic Registration of Stocks, Bonds, Etc. (the \u2018Electronic Securities Act\u2019) to accommodate the issuance of security tokens, OTC trading intermediaries for fractional investment products and related infrastructure. These amendments are scheduled to take effect on 4 February 2027, and the FSC is currently preparing the relevant subordinate legislation and guidelines through a public-private consultative body launched in March 2026.<\/p>\n<p><strong>Public Sector<\/strong><\/p>\n<p>The government has piloted blockchain technology across a range of public services, including electronic voting, vaccination certification and decentralised identity (\u2018DID\u2019) verification. The Ministry of Science and ICT (\u2018MSIT\u2019) has formulated a strategy for the broader adoption of blockchain technology and supports pilot projects in both the public and private sectors.<\/p>\n<p><strong>Other Sectors<\/strong><\/p>\n<p>Blockchain-based platforms are also being adopted in areas such as trade finance, customs clearance and supply chain management, and major IT services companies, including Samsung SDS and LG CNS, have developed blockchain-based logistics and enterprise solutions. Blockchain technology is also being deployed in healthcare, including electronic health records management; energy, including peer-to-peer (\u2018P2P\u2019) electricity trading; and content-related applications, including non-fungible tokens (\u2018NFTs\u2019) and digital copyright management.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please outline the principal legislation and the regulators most relevant to the use of blockchain technologies in your jurisdiction. In particular, is there any blockchain-specific legislation or are there any blockchain-specific regulatory frameworks in your jurisdiction, either now or envisaged in the short or mid-term?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Principal Legislation<\/strong><\/p>\n<p>South Korea does not currently have legislation specifically governing blockchain technology itself. The regulation of virtual assets is principally anchored in the AML Act and the VAUPA.<\/p>\n<p><strong>AML Act<\/strong><\/p>\n<p>The AML Act is the principal legislation establishing the reporting regime for VASPs.<\/p>\n<p>The AML Act applies to virtual assets and VASPs as defined under the VAUPA. In this context, \u2018virtual assets\u2019 means \u2018electronic certificates (including all rights thereto) that have economic value and that can be traded or transferred electronically\u2019, subject to certain exclusions, including electronic prepayment means, electronically registered stocks and electronic bills.<\/p>\n<p>VASPs must file with KoFIU and satisfy certain requirements, including: (i) obtaining Information Security Management System (\u2018ISMS\u2019) certification; (ii) securing a real-name verified deposit and withdrawal account, where the VASP engages in the exchange of virtual assets for fiat currency; and (iii) ensuring that the VASP\u2019s officers and representatives are not subject to any applicable grounds for disqualification. A VASP filing is valid for three years and must thereafter be renewed. A recent amendment to the AML Act strengthened the reporting requirements relating to major shareholders and introduced a power to impose conditions when accepting a filing.<\/p>\n<p><strong>VAUPA<\/strong><\/p>\n<p>The VAUPA is a dedicated statute for the protection of virtual asset users. Its key requirements include the following:<\/p>\n<p><strong>User Asset Protection:<\/strong> User deposits must be segregated from the VASP\u2019s proprietary assets and deposited with or entrusted to a prescribed bank for safekeeping and management. User virtual assets must likewise be segregated from the VASP\u2019s own virtual assets, and the VASP must at all times effectively hold virtual assets of the same type and quantity as those entrusted by users. At least 80% of user virtual assets must be stored offline (i.e., in cold wallets).<\/p>\n<p><strong>Prohibition of Unfair Trading Practices:<\/strong> Insider trading based on material non-public information, market manipulation and fraudulent trading are prohibited.<\/p>\n<p><strong>Abnormal Transaction Monitoring:<\/strong> Operators of virtual asset markets are required to conduct ongoing surveillance for abnormal transactions.<\/p>\n<p><strong>Transaction Record Retention:<\/strong> VASPs must retain transaction records for 15 years.<\/p>\n<p><strong>Insurance\/Reserves:<\/strong> VASPs must maintain insurance coverage or reserve funds against incidents such as hacking and system failures.<\/p>\n<p>Legislative discussions concerning comprehensive second-stage virtual asset legislation, commonly referred to as the Digital Asset Basic Act, remain ongoing. Key issues under consideration include a comprehensive licensing regime for the issuance and distribution of virtual assets, business conduct rules, disclosure and listing requirements, and stablecoin regulation. Separately, the government has been pursuing the phased participation of corporations in the virtual asset market.<\/p>\n<p>Legislative efforts have also been pursued in the National Assembly to enact a dedicated statute for the promotion of the blockchain industry, although no such statute has been enacted to date.<\/p>\n<p><strong>Principal Regulators<\/strong><\/p>\n<p><strong>Financial Services Commission:<\/strong> The FSC is the primary financial regulatory authority responsible for administering the AML Act and the VAUPA and for formulating policy on virtual assets, security tokens and other digital finance matters.<\/p>\n<p><strong>Korea Financial Intelligence Unit:<\/strong> KoFIU is established within the FSC and is responsible for VASP filings and for supervising compliance with anti-money laundering and countering the financing of terrorism (\u2018AML\/CFT\u2019) requirements. Under the AML Act, KoFIU has the authority, in prescribed circumstances, to order the suspension of all or part of a VASP\u2019s business operations and to cancel a VASP\u2019s filing ex officio. Certain filing-related functions, including the review of VASP filing and renewal applications and the examination of grounds for non-acceptance and ex officio cancellation, are entrusted to the Financial Supervisory Service (\u2018FSS\u2019).<\/p>\n<p><strong>Financial Supervisory Service:<\/strong> The FSS carries out inspections and other supervisory functions in relation to VASPs as delegated by the FSC. Although the VAUPA vests the FSC with statutory authority to supervise and inspect VASPs, certain functions, including VASP inspections, are delegated to the FSS. The FSS also participates with the FSC in investigations into unfair trading in the virtual asset market and, as noted above, is entrusted by KoFIU with the substantive review of VASP filing and renewal applications under the AML Act.<\/p>\n<p><strong>Ministry of Science and ICT:<\/strong> Although MSIT does not regulate blockchain technology under a dedicated statute, it works with affiliated agencies, including the Korea Internet &amp; Security Agency (\u2018KISA\u2019), to promote the development, adoption and broader diffusion of blockchain technology. Under its organisational mandate, MSIT is responsible for formulating policy on blockchain industry promotion and support, technology development and standardisation, enterprise development and technology diffusion pilot projects.<\/p>\n<p>MSIT is currently preparing a draft bill to promote blockchain technology and the related industry. The draft bill is expected to include provisions addressing the legal effect of distributed ledger records and smart contracts, as well as measures for government support. The timing and manner of its submission to the National Assembly have not yet been determined.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current attitude of the government and of regulators to the use of blockchain technology in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The South Korean government\u2019s approach to blockchain and digital assets broadly seeks to promote the development and adoption of the underlying technology, while balancing market development with appropriate regulation in the financial sector.<\/p>\n<p><strong>Technology Promotion<\/strong><\/p>\n<p>As described above, MSIT has pursued policies to promote the adoption and development of blockchain technology through public- and private-sector pilot projects, regulatory sandboxes and designated special zones. Blockchain has been treated as an enabling technology with potential applications across a wide range of industries, alongside broader policy support for emerging areas such as Web3, the metaverse and digital assets.<\/p>\n<p><strong>Financial Sector: Promotion and Regulation<\/strong><\/p>\n<p>In the financial sector, the government has taken a more balanced approach, seeking to facilitate the development of digital asset and blockchain-based financial markets while introducing safeguards for investor protection and market integrity.<\/p>\n<p>On the regulatory side, the implementation of the AML Act in 2021 led to the exit of numerous VASPs that did not complete the required filing with KoFIU. The VAUPA, which came into effect in 2024, subsequently introduced rules against unfair trading and requirements for the segregation of user assets, and the broader regulatory framework continues to evolve through subsequent measures.<\/p>\n<p>At the same time, the government has taken steps to integrate blockchain-based financial products into the existing capital markets framework. In February 2026, amendments to the Electronic Securities Act and the FSCMA were enacted to establish a legal framework for the issuance and circulation of security tokens using DLT. These amendments are scheduled to take effect on 4 February 2027.<\/p>\n<p>In September 2026, the FSC announced a policy roadmap for the phased development of security token infrastructure, covering not only fractional investment products but also traditional securities such as stocks, bonds and funds. These developments illustrate the government\u2019s broader approach of facilitating financial innovation within the existing capital markets framework while maintaining investor protection and market stability.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a central bank digital currency (\u2018CBDC\u2019) project in your jurisdiction? If so, what is the status of the project?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Bank of Korea (\u2018BOK\u2019) has not yet decided whether or when to issue a CBDC. It has, however, actively conducted research and experimentation on digital currencies since 2020, examining technological and institutional issues as well as the potential implications for monetary policy, financial stability and privacy.<\/p>\n<p>More recently, the BOK has focused on testing a future monetary infrastructure based on wholesale CBDC and tokenised deposits through Project Hangang, which was launched jointly with the FSC and the FSS in October 2023. The project comprises both simulated tests and real-world transaction testing. In particular, a live transaction pilot involving seven domestic banks and up to 100,000 participants was conducted between April and June 2025.<\/p>\n<p>The project is currently in its second phase, which is expected to expand the scope of testing to include additional features such as person-to-person transfers and a broader range of digital voucher use cases.<\/p>\n<p>The BOK also participates in international initiatives concerning tokenisation and cross-border payments, including Project Agor\u00e1 with the Bank for International Settlements (\u2018BIS\u2019) and other central banks, under which real-value testing involving KRW and five other currencies was conducted in July 2026. In addition, the BOK participated in the first phase of Project Mandala.<\/p>\n<p>While no decision has been made on the introduction of a CBDC, the BOK continues to develop the technical and institutional foundations necessary to respond should a need for digital central bank money arise.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to the treatment of cryptoassets and decentralised finance (\u2018DeFi\u2019) for the purposes of financial regulation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Virtual Asset Regulation<\/strong><\/p>\n<p>South Korea maintains separate regulatory regimes for non-security virtual assets and for digital assets that constitute securities. Non-security virtual assets are principally regulated under the AML Act, which establishes the VASP filing requirements, and the VAUPA, which establishes user protection and market conduct requirements, including prohibitions on unfair trading broadly analogous to those applicable under the FSCMA.<\/p>\n<p>Digital assets that constitute securities, by contrast, remain subject to the FSCMA regardless of their technological form.<\/p>\n<p><strong>Security Tokens<\/strong><\/p>\n<p>As noted above, the recently enacted amendments to the Electronic Securities Act and the FSCMA will, from 4 February 2027, provide an express statutory basis for the issuance and circulation of security tokens using DLT within the existing capital markets framework.<\/p>\n<p><strong>DeFi Regulation<\/strong><\/p>\n<p>South Korea does not currently have a DeFi-specific statutory regime, and the regulators have not issued any specific guidance or administrative interpretation addressing DeFi.<\/p>\n<p>However, where a person or entity carries on, as a business, activities falling within the definition of a VASP under the AML Act \u2013 such as buying or selling, exchanging, transferring, safekeeping or managing virtual assets, or intermediating, facilitating or acting as an agent for their purchase, sale or exchange \u2013 the filing requirement with KoFIU may apply, regardless of whether the relevant services are described as DeFi.<\/p>\n<p>In genuinely decentralised arrangements, where there is no identifiable operator exercising substantial influence over or control of the relevant services, the application and practical enforcement of the existing regulatory framework may be less straightforward.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to the treatment of cryptoassets and DeFi for the purposes of anti-money laundering and sanctions?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>AML\/CFT Regulatory Framework<\/strong><\/p>\n<p>The AML Act is the principal statute imposing AML\/CFT obligations on VASPs, which are required to file with KoFIU and are subject to substantially the same core AML\/CFT requirements as other regulated financial institutions.<\/p>\n<p>The key obligations include the following:<\/p>\n<p><strong>Customer Due Diligence:<\/strong> VASPs must identify and verify their customers and, where applicable, their beneficial owners. Enhanced due diligence applies where heightened money laundering or terrorist financing risks are identified and includes additional inquiries into matters such as the purpose of the transaction and the source of funds.<\/p>\n<p><strong>Suspicious Transaction Reporting:<\/strong> VASPs must report transactions to KoFIU where there are reasonable grounds to suspect that the assets involved constitute illicit property or that the transaction involves money laundering or terrorist financing.<\/p>\n<p><strong>Real-Name Verified Accounts:<\/strong> VASPs offering KRW-based transactions are required to conduct such transactions through real-name verified deposit and withdrawal accounts maintained with banks, subject to limited exceptions under the applicable regulations.<\/p>\n<p><strong>Travel Rule:<\/strong> VASPs are required to transmit prescribed originator and beneficiary information when transferring virtual assets to another VASP. Amendments to the Enforcement Decree of the AML Act enacted in August 2026 will, with effect from February 2027, remove the existing KRW1 million monetary threshold, requiring VASPs to provide the prescribed information for all VASP-to-VASP transfers, regardless of the amount.<\/p>\n<p><strong>Internal Controls:<\/strong> VASPs are required to maintain AML\/CFT policies, internal reporting systems, employee training and risk-based compliance procedures.<\/p>\n<p><strong>Sanctions<\/strong><\/p>\n<p>VASPs are also subject to South Korea\u2019s targeted financial sanctions regime under the Act on Prohibition against the Financing of Terrorism and Proliferation of Weapons of Mass Destruction. As VASPs fall within the category of regulated financial institutions for these purposes, they generally may not process transactions involving persons or entities designated as subject to financial transaction restrictions without the requisite approval of the FSC.<\/p>\n<p><strong>DeFi<\/strong><\/p>\n<p>South Korea does not currently have a separate AML\/CFT or sanctions regime specifically designed for DeFi. Instead, the existing AML\/CFT and sanctions regimes may apply, depending on the particular structure and functions of the relevant arrangement.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to the treatment of cryptoassets and DeFi for the purposes of taxation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Income Tax<\/strong><\/p>\n<p>South Korea has enacted amendments to the Income Tax Act under which income derived by resident individuals from the transfer or lending of virtual assets is classified as \u2018other income\u2019 and subject to separate taxation. The implementation of this regime has been repeatedly deferred and is currently scheduled to take effect on 1 January 2027. Accordingly, as of October 2026, the tax regime applicable to virtual asset transfer and lending income of resident individuals has not yet taken effect.<\/p>\n<p><strong>Corporate Taxation<\/strong><\/p>\n<p>Income realised by Korean corporations from virtual asset transactions is generally included in taxable corporate income under the ordinary rules of the Corporate Tax Act.<\/p>\n<p><strong>DeFi<\/strong><\/p>\n<p>South Korea does not currently have a separate tax regime specifically designed for DeFi. Instead, the tax treatment of a DeFi transaction depends on the nature and substance of the relevant transaction and the generally applicable tax rules.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current approach in your jurisdiction to retail and wholesale tokenisation projects?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Security Token Framework<\/strong><\/p>\n<p>As described above, South Korea has enacted amendments to the Electronic Securities Act and the FSCMA establishing a statutory framework for security tokens, with effect from 4 February 2027. Security tokens are treated as a digital form of existing securities rather than as a separate category of securities, and remain subject to the existing capital markets regulatory framework.<\/p>\n<p><strong>Retail Tokenisation<\/strong><\/p>\n<p>Fractional investment securities are expected to be among the first retail-oriented products to be tokenised under the new framework. Under the FSC\u2019s September 2026 roadmap, publicly offered fractional investment securities are among the products scheduled for tokenisation in the first phase beginning in February 2027. The framework is intended to permit wider use of tokenised securities while maintaining existing disclosure, distribution and investor protection requirements.<\/p>\n<p><strong>Wholesale Tokenisation<\/strong><\/p>\n<p>The FSC is also pursuing the tokenisation of conventional securities for institutional markets. The first phase of its three-phase roadmap includes private money market funds (\u2018MMFs\u2019) and privately placed bonds reserved for institutional investors, with the scope expected to expand gradually to other securities.<\/p>\n<p>In addition, the FSC\u2019s roadmap contemplates extending the trust and beneficiary certificate issuance structure currently used for fractional ownership of listed shares through the Korea Securities Depository (\u2018KSD\u2019) to unlisted shares, thereby enabling tokenised investment in unlisted equities using the same existing infrastructure.<\/p>\n<p>In the second phase, tokenised shares of KRX-listed companies are expected to be made available for trading by both retail and professional investors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any prohibitions on the use or trading of cryptoassets in your jurisdiction? If permitted, is cryptoasset trading common?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no general prohibition on the holding, use or trading of crypto assets in South Korea. Crypto assets are not, however, recognised as legal tender, and their regulatory treatment depends on their characteristics and the activities in which they are used. For example, a crypto asset that constitutes a security is subject to the FSCMA.<\/p>\n<p>The VAUPA, which took effect in July 2024, does not prohibit crypto asset trading. Rather, it establishes requirements for the protection of users\u2019 deposits and crypto assets and prohibits unfair trading practices, including the use of material non-public information, market manipulation and fraudulent trading.<\/p>\n<p>Crypto asset trading is common in South Korea. According to a survey published by the FSC, as at the end of 2025, the number of user accounts eligible to trade with domestic VASPs was approximately 11.13 million. Average daily trading volume during the second half of 2025 was approximately KRW5.4 trillion, while the aggregate market capitalisation of crypto assets traded through domestic service providers was approximately KRW87.2 trillion. These figures indicate substantial retail participation, notwithstanding fluctuations in trading volume and market value.<\/p>\n<p>Corporations are not yet permitted to open real-name verified trading accounts with virtual asset exchanges. In February 2025, the FSC announced a phased roadmap for the gradual opening of corporate participation in the virtual asset market, beginning with limited categories of entities such as non-profit organisations, virtual asset-related businesses and listed companies holding virtual assets, initially for purposes such as the disposal or conversion of existing holdings. Further phases are expected to broaden the scope of permitted corporate participation, subject to market conditions and the progress of broader legislative developments. As of October 2026, corporate trading accounts remain subject to restrictions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what extent have initial coin offerings (\u2018ICOs\u2019) taken place in your jurisdiction and what has been the attitude of relevant authorities to ICOs? If permissible, what are the key requirements that an entity would need to comply with when launching an ICO?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In September 2017, the South Korean government announced a policy prohibiting all forms of ICOs, including ICOs structured as securities issuances. The policy was introduced in response to concerns that ICOs could be used for fraudulent fundraising, fuel speculative investment and cause significant investor losses. Although the prohibition was announced as a governmental policy rather than enacted as a standalone statutory prohibition, domestic ICOs are not currently permitted in practice.<\/p>\n<p>Following the introduction of the policy, a number of South Korean businesses sought to conduct ICOs through entities established in overseas jurisdictions. In 2019, the FSC published the results of a survey of 22 South Korean businesses reported to have conducted overseas ICOs. The FSC found that most had established small overseas entities through which the ICOs were formally conducted outside South Korea, while development, marketing and other substantive activities continued to be carried out domestically. The offerings had raised approximately KRW566.4 billion in aggregate and appeared, in many cases, to have targeted South Korean investors through Korean-language white papers and domestic marketing.<\/p>\n<p>The FSC also identified significant deficiencies in the disclosure of information concerning the issuers, their businesses, financial condition, use of proceeds and development teams. None of the surveyed projects had launched the services contemplated in their white papers at the time of the survey, and the prices of all tokens issued through the relevant ICOs had declined from their initial trading prices. The FSC therefore maintained its cautious position on the institutionalisation of ICOs and stated that potentially unlawful cases involving unlicensed financial investment business, fraud or other illegal fundraising would be referred to the relevant investigative authorities.<\/p>\n<p>Accordingly, there is currently no regulatory framework under which an entity may lawfully launch a domestic ICO in South Korea, and there are no prescribed requirements for doing so. As discussed in Question 2 above, legislative proposals for comprehensive second-stage virtual asset legislation contemplate replacing the existing policy with a regulated issuance and disclosure regime, including the filing of an issuance disclosure statement. However, these proposals have not yet been enacted, and the existing restrictive policy remains in place.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any legal or regulatory issues concerning the transfer of title to or the granting of security over cryptoassets?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>South Korean law does not yet contain a comprehensive private law framework governing title to, or the creation, perfection and enforcement of security interests over, crypto assets. Although crypto assets are generally recognised as having economic and proprietary value, their precise characterisation under the Korean Civil Act remains unsettled.<\/p>\n<p>In Supreme Court Decision 2018Do3619 (30 May 2018), the Supreme Court held that Bitcoin constituted \u2018intangible property having economic value\u2019 and could therefore be confiscated as criminal proceeds. The decision established that Bitcoin may constitute property for the purposes of confiscation, but did not determine whether a crypto asset is a \u2018thing\u2019 capable of being owned under Article 98 of the Civil Act or otherwise define the nature of a holder\u2019s private law rights. Accordingly, it remains unclear whether concepts applicable to the transfer of ownership in tangible property apply directly to crypto assets.<\/p>\n<p>The creation of security over crypto assets is similarly uncertain. It is not settled whether a pledge or other proprietary security interest may be created directly over a crypto asset or how such an interest should be perfected against third parties.<\/p>\n<p>In practice, parties may seek to protect a secured creditor by transferring the crypto assets to a wallet controlled by the creditor or an independent custodian, using a multi-signature arrangement, or granting security over the holder\u2019s contractual claim for the return of crypto assets held by an exchange or custodian. These structures have not, however, been comprehensively tested by the Korean courts, particularly as regards priority, enforcement and insolvency.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are smart contracts characterised within your legal framework? Are there any enforceability issues specific to the operation of smart contracts which do not arise in the case of traditional legal contracts?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>South Korean law does not currently contain a generally applicable statutory definition of a smart contract or a separate legal framework governing its validity and enforceability. The legal characterisation of a smart contract therefore depends on its function and the circumstances in which it is used.<\/p>\n<p>A smart contract may constitute an enforceable contract under the Korean Civil Act if it satisfies the requirements applicable to contracts generally, including an offer and acceptance, sufficiently definite terms and an intention to create legal relations. Its electronic or automated form does not, in itself, prevent it from having legal effect. The Framework Act on Electronic Documents and Transactions provides that an electronic document may not be denied legal effect solely because it is in electronic form. Similarly, the Electronic Signature Act provides that an electronic signature may not be denied legal effect solely because it is in electronic form.<\/p>\n<p>Accordingly, smart contracts are not subject to separate rules of enforceability under South Korean law and are generally governed by ordinary principles of contract law. Their automated and immutable operation may nevertheless create practical difficulties in establishing the parties\u2019 intentions and authority and in implementing remedies.<\/p>\n<p>As noted in Question 2, MSIT is preparing a draft bill that is expected to include a provision addressing the legal effect of smart contracts.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are Decentralised Autonomous Organisations (\u2018DAOs\u2019) treated in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>South Korean law does not currently recognise a DAO as a distinct legal form or confer separate legal personality on a DAO merely because it operates through blockchain-based governance or smart contracts. There is no DAO-specific incorporation or registration regime, and no established judicial authority specifically determining the legal status of DAOs.<\/p>\n<p>A DAO could therefore be characterised according to the substance of its organisation, governance arrangements and activities under existing law. Depending on its specific form and structure, a DAO may be regarded as a partnership or an unincorporated association under the Civil Act, or a network of contractual relationships among its participants. The applicable classification depends on factors such as the participants&#8217; contributions, voting rights, economic interests and degree of control, rather than any single factor such as the holding of a governance token.<\/p>\n<p>The holding of a governance token alone would not necessarily determine membership or liability.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Have there been any governmental or regulatory enforcement actions concerning blockchain in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. Although there have been relatively few enforcement actions concerning blockchain technology itself, South Korean authorities have actively investigated and sanctioned unlawful activities involving crypto assets and VASPs. Enforcement has primarily focused on business activities conducted without the required filing, breaches of AML requirements, fraud and market misconduct.<\/p>\n<p>KoFIU has conducted inspections of VASPs that have completed the filing and imposed sanctions for failures relating to customer due diligence, suspicious transaction reporting, transaction restrictions and other AML controls. It has also referred domestic and overseas VASPs operating without the required filing to investigative authorities and requested measures such as the blocking of access to their websites or mobile applications. A person conducting virtual asset business targeting South Korean users may be subject to enforcement even if it has no physical establishment in South Korea.<\/p>\n<p>The VAUPA, which came into force on 19 July 2024, has significantly strengthened enforcement against unfair trading in the virtual asset market. It prohibits the use of undisclosed material information, market manipulation and fraudulent trading, and empowers the FSC and the FSS to investigate suspected violations, impose administrative sanctions and refer cases for criminal investigation. Virtual asset exchanges are also required to monitor abnormal transactions and report suspected misconduct.<\/p>\n<p>As of 20 July 2026, the financial authorities had completed investigations into approximately 40 cases and referred or reported approximately 30 cases to investigative authorities. Criminal prosecutions have also been brought for alleged market manipulation under the VAUPA, with the first such prosecution resulting in convictions at first instance in February 2026.<\/p>\n<p>Separate enforcement action may be taken under generally applicable criminal and financial legislation. The police and prosecutors have investigated token offerings, crypto asset investment schemes and DeFi projects involving fraud, embezzlement, breach of trust, unauthorised fundraising or violations of capital markets legislation. Where a token constitutes a security, its issuance or distribution without compliance with the FSCMA may result in administrative or criminal sanctions.<\/p>\n<p>More recently, the Korea Communications Standards Commission (\u2018KCSC\u2019) ordered the blocking of access to a website and mobile application operating a prediction market. On the platform, users wagered stablecoins on whether certain events would occur, using decentralised P2P wallets and smart contracts, and received stablecoin payouts if their predictions proved correct. The KCSC found that the service constituted information relating to speculative acts prohibited under Korean law, the distribution of which is banned under the Act on Promotion of Information and Communications Network Utilization and Information Protection (the \u2018Network Act\u2019). The operator is expected to challenge the decision by filing an objection with the KCSC or by seeking judicial review.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other generally-applicable laws, case law or regulations that may present issues for the use of blockchain technology (such as privacy and data protection law or insolvency law)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Personal Information Protection Act (\u2018PIPA\u2019) applies where personal information is recorded or otherwise processed through a blockchain system. Information stored under a pseudonym or represented by a wallet address may still constitute personal information if an individual can reasonably be identified by combining it with other information. Relevant participants may therefore be required to establish a lawful basis for processing, provide required notices, implement security measures and comply with restrictions on the provision and cross-border transfer of personal information.<\/p>\n<p>In insolvency proceedings, crypto assets controlled or beneficially owned by a debtor may form part of the debtor\u2019s rehabilitation or bankruptcy estate. As noted in Question 11, the Supreme Court has held that Bitcoin constitutes intangible property having economic value and may be confiscated as criminal proceeds (Supreme Court Decision 2018Do3619, 30 May 2018).<\/p>\n<p>However, issues may arise in identifying and valuing crypto assets, obtaining private keys and determining whether assets held by an exchange or custodian belong to the customer or form part of the custodian\u2019s own estate. Although the VAUPA requires VASPs to segregate users\u2019 deposits and crypto assets and imposes related custody requirements, the recovery available to a customer in a particular insolvency remains dependent on the relevant custody arrangements and proprietary rights.<\/p>\n<p>Depending on the relevant service, the Act on Consumer Protection in Electronic Commerce, the Act on the Regulation of Terms and Conditions, the Electronic Financial Transactions Act and intellectual property legislation may also apply. In particular, blockchain-based payment, wallet or settlement services should be assessed to determine whether they constitute regulated electronic financial services. Operators should also address ownership and licensing of software and digital content, open-source licence compliance, cybersecurity obligations, consumer disclosure requirements and the allocation of responsibility for lost private keys, coding errors and unauthorised transactions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other key issues concerning blockchain technology in your jurisdiction that legal practitioners should be aware of?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The regulatory treatment of a blockchain project in South Korea is determined by its substance rather than its name or technological form. A single project may simultaneously raise issues under securities, virtual asset, electronic financial transactions, anti-money laundering, consumer protection, data protection, foreign exchange and tax legislation. Legal practitioners should therefore assess the regulatory characterisation of each token, service and transaction at an early stage, rather than treating a project as a single undifferentiated blockchain service.<\/p>\n<p>The territorial scope of South Korean regulation is also important. An overseas operator may become subject to South Korean law if it actively targets South Korean users, including through Korean-language services, domestic marketing, Korean won payment channels or other locally directed activities. Establishing an offshore entity or operating through a decentralised protocol does not necessarily prevent the application of South Korean law.<\/p>\n<p>Finally, the South Korean regulatory framework continues to develop rapidly. The VAUPA represents the first stage of comprehensive virtual asset legislation, and further legislation concerning the issuance and disclosure of virtual assets, business conduct, stablecoins and the regulation of additional types of virtual asset businesses remains under consideration.<\/p>\n<p>If such comprehensive second-stage legislation is enacted, it is expected to open further discussion on a range of issues currently constrained by the existing policy framework, including the opening of corporate trading accounts for virtual assets, the introduction of spot virtual asset exchange-traded funds (\u2018ETFs\u2019) and the relaxation of <em>geum-ga bunri<\/em> (for example, by permitting financial institutions or MyData operators to file as VASPs).<\/p>\n<p>Legal practitioners should therefore continue to monitor legislative developments, regulatory guidance and enforcement practice throughout the life cycle of a blockchain project, rather than relying solely on the legal position prevailing at the time of launch.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">5661<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/151872","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=151872"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}