Is South Korea prepared for Trump’s plan to make the US the ‘crypto capital’?
unlocking Trump’s promises for the cryptocurrency industry could have significant implications for South Korea. Amid Trump’s pro-crypto initiatives, including the creation of a presidential working group and the suspension of a US Central Bank Digital Currency, the global market’s reaction has been volatile. This global excitement is further fueled by expert predictions that remain favorable for the cryptocurrency market.
In the US, notable changes have been witnessed, such as the repeal of SAB 121, a restrictive framework that imposed strict disclosure requirements on financial institutions holding crypto assets for customers. This move was welcomed by both the financial and crypto sectors, paving the way for enhanced collaboration between traditional banks and the cryptocurrency industry.
Conversely, South Korea has lagged behind in this aspect, with no legal framework allowing banks to offer direct crypto custody. While local banks have partnered with crypto firms to establish virtual asset custody services, underdeveloped regulations and restrictions limit their involvement in corporate crypto transactions.
Despite these challenges, there have been recent efforts to facilitate corporate involvement in cryptocurrencies in South Korea. The Financial Services Commission has announced plans to gradually allow real-name accounts for corporations, a step that industry experts believe is essential for the advancement of the local crypto landscape.
Trump’s executive order also underscores his support for stablecoins, private digital currencies pegged to assets like the US dollar. This stance aligns with his rejection of central bank digital currencies (CBDCs), emphasizing the importance of private market-driven payment networks. While some experts advocate for Korea to embrace both CBDCs and stablecoins, ensuring a balance between financial stability and investor protection is crucial.
The rise of stablecoins poses new challenges for regulatory frameworks, with the FSC in Korea beginning discussions on establishing a stablecoin regulatory framework. Meanwhile, initiatives to test the digital won and issue deposit tokens aim to integrate digital payments into the traditional monetary system, laying the groundwork for the broader adoption of won-denominated stablecoins.
In contrast to Trump’s proactive approach to cryptocurrency regulation, South Korea has maintained a cautious stance on digital assets, perceiving them largely as speculative investments. The establishment of a working group to develop sector-specific regulations and explore the creation of a national cryptocurrency stockpile in the US highlights the differing approaches taken by the two countries in fostering crypto industry growth.
Overall, the implications of Trump’s crypto promises and the evolving regulatory landscape for digital assets have profound implications for South Korea. Balancing the need for regulatory clarity, institutional collaboration, and technological innovation will be pivotal in shaping the future of crypto in the country.