South Korea's cryptocurrency landscape is poised for significant change following the election of Lee Jae-myung as the new president. Lee's victory, secured with 49.42% of the vote on June 3rd, 2025, signals a potentially more welcoming environment for digital assets in a nation already recognized as a major player in the global crypto market. However, this optimistic outlook is tempered by the persistent issue of crypto-related scandals and the need for robust regulatory oversight.

Lee Jae-myung has openly expressed his support for the cryptocurrency industry, advocating for policies that could reshape South Korea's digital asset landscape. A cornerstone of his agenda is allowing the Korean National Pension Fund, which manages over $884 billion, to invest in Bitcoin and other cryptocurrencies. This move aims to legitimize Bitcoin as a recognized investment asset and integrate cryptocurrencies into the country's long-term economic strategy. He also intends to legalize spot crypto Exchange Traded Funds (ETFs). Furthermore, he has pledged to establish a safe and transparent regulatory environment for cryptocurrency trading, focusing on empowering younger generations to build digital wealth.

Another key proposal is the creation of a Korean Won-backed stablecoin. This initiative seeks to reduce the nation's reliance on foreign stablecoins like USDT and USDC, which leads to significant capital outflows – estimated at 56.8 trillion won. By launching a local stablecoin, Lee aims to enhance South Korea's financial independence and monetary sovereignty. To facilitate Bitcoin trading, Lee plans to establish an official institution to manage instant Bitcoin trading funds. This will be supported by an integrated regulatory system to monitor digital transactions, enhance transparency, and build trust within the cryptocurrency market.

The Lee administration will oversee the second phase of digital asset market regulation, building upon the initial framework launched in July 2024. A national digital assets committee, reporting directly to the presidential office, will expedite the legislative process, foster financial innovation, and create a clear and secure digital environment for cryptocurrency investors.

However, South Korea's crypto journey isn't without its challenges. The nation has been grappling with crypto-related crimes, market manipulation, and the need for stricter regulatory controls. In response, South Korea has been actively strengthening its regulatory framework to balance innovation with risk mitigation. The Financial Services Commission (FSC) has unveiled new regulations taking effect on June 1, 2025, impacting how non-profit organizations and virtual asset exchanges interact with cryptocurrencies. These regulations address concerns about money laundering, market manipulation, and speculative excesses. Non-profits, previously restricted from holding virtual assets, can now accept and convert crypto donations, but with strict conditions. They must have been operational for five years, undergo external audits, and establish internal committees to review donations and liquidation plans. All donated crypto must be immediately converted to cash. Exchanges also face stricter rules, including sales limits on the top 20 cryptocurrencies by market capitalization and daily sales caps to prevent market disruption.

South Korea has also ramped up efforts to combat crypto crimes by converting its specialized task force into a permanent investigative unit. The Ministry of Justice plans to amend the Enforcement Decree of the Prosecutor's Office Act to institutionalize the Joint Investigation Department (JIU) for Virtual Assets as a permanent entity. In early 2025, U.S. federal authorities charged a South Korean cryptocurrency mogul with defrauding investors of over $40 billion between 2018 and 2022, highlighting the scale of potential financial crimes in the crypto space.

Despite the pro-crypto sentiment, authorities have been tightening oversight, postponing tax plans, and issuing warnings about North Korean-linked hacks targeting the crypto sector. The Financial Services Commission (FSC) has also been implementing safeguards against price manipulation and tightening oversight of stablecoins. This comprehensive approach reflects South Korea's commitment to creating a sustainable and secure crypto ecosystem.

The South Korean crypto market has demonstrated resilience through multiple regulatory cycles. Despite facing strict compliance measures, the virtual asset market capitalization exceeded 100 trillion won in 2024. As Lee Jae-myung begins his term, South Korea stands at a crucial juncture. His pro-crypto stance, coupled with ongoing regulatory developments and the need to address persistent scandals, will shape the future of cryptocurrencies in one of the world's most dynamic digital asset markets.