Four Key Shifts in the Global Crypto Market After South Korea’s Presidential Election

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South Korea is on the cusp of a pivotal political moment with its upcoming presidential election. While the vote may appear domestic in nature, its implications ripple far beyond national borders—especially for the global cryptocurrency market. As one of the world’s most active digital asset hubs, second only to the U.S. and China, South Korea’s regulatory direction will shape investment flows, innovation trends, and market structure across Asia and beyond.

With over 9.7 million active crypto users and a daily trading volume exceeding $5.4 billion, the country serves as a critical barometer for Web3 adoption. Upcoming policy decisions on taxation, ETF approvals, banking access for exchanges, and local stablecoin development are poised to redefine the landscape—not just locally, but globally.

This article explores four transformative changes likely to emerge post-election, backed by data, candidate positions, and international precedents.

Why South Korea’s Election Matters to Global Crypto Markets

At first glance, a national election might seem like an internal affair. But in South Korea’s case, the outcome directly influences global sentiment and behavior in the crypto space.

The country has long been a bellwether for Asian market trends. Korean investors are known for their high engagement with altcoins, active on-chain participation, and appetite for early-stage projects. For international Web3 teams, gaining traction in Korea often serves as a springboard into broader Asian markets.

Now, for the first time, key crypto-related issues—such as tax policy, ETF approval, banking regulations, and stablecoin frameworks—are central topics in the presidential debate. This marks a turning point: digital assets are no longer niche; they’re part of mainstream economic discourse.

👉 Discover how regulatory shifts can unlock new investment opportunities in emerging markets.

1. End of the Crypto Tax Moratorium

Currently, South Korea has postponed the implementation of capital gains taxes on cryptocurrency until 2027. Originally set to begin in January 2025, the 20% tax on annual gains exceeding approximately $1,850 was delayed due to market volatility and industry pushback.

However, this reprieve is unlikely to last.

With financial authorities planning to allow listed companies and institutional investors to enter the crypto market by late 2025, maintaining a tax exemption for both individuals and corporations becomes increasingly untenable. Experts anticipate that the next administration will move to end the moratorium early—potentially accelerating tax enforcement.

Historical parallels suggest significant consequences. When India introduced a 30% tax on crypto profits and a 1% transaction withholding tax in 2022, trading volumes on major platforms like WazirX and CoinDCX dropped by 10% to 70%. Similarly, Indonesia saw a ~60% year-on-year decline in trading activity after imposing strict crypto taxes in 2023.

While South Korea’s proposed rate is more moderate, a drop of over 20% in domestic exchange volumes is still plausible. More concerning is the risk of capital flight to offshore platforms that offer greater privacy and lower compliance burdens.

Core implication: Local exchanges like Upbit and Bithumb could see reduced liquidity, while demand for non-KRW-denominated trading pairs may rise.

2. High Likelihood of Spot Bitcoin ETF Approval

Unlike other crypto policies mired in partisan debate, spot Bitcoin ETFs enjoy rare cross-party support among leading candidates:

This consensus dramatically increases the odds of swift regulatory action post-election. If approved, these ETFs would provide retail investors with regulated, low-cost exposure to Bitcoin—similar to U.S.-listed products.

Beyond accessibility, ETFs could catalyze broader financial innovation. They may pave the way for crypto-linked derivatives, index funds, and hybrid financial instruments integrating traditional finance (TradFi) with decentralized finance (DeFi).

Moreover, competition between ETF providers and existing spot exchanges could drive down trading fees industry-wide—benefiting all market participants.

👉 See how ETF structures are reshaping investor access to digital assets worldwide.

3. Reevaluating the “One Exchange, One Bank” Rule

South Korea’s restrictive “one exchange, one bank” policy limits each licensed crypto platform to a single banking partner for real-name account services. For example:

This model was designed to strengthen anti-money laundering (AML) controls. But critics argue it creates artificial monopolies and stifles competition.

In reality, Upbit and Bithumb already control around 97% of the domestic market—proving that current rules do not prevent consolidation. Meanwhile, platforms in jurisdictions like the U.S. enjoy integrations with multiple banks and payment systems (e.g., Coinbase with Apple Pay, Google Pay).

Woojin Jung, CEO of Woori Bank, has publicly called for reform, advocating a shift to a “one exchange, multiple banks” model. The People Power Party has formally included abolishing the rule in its digital asset platform.

Greater banking access could lead to:

Regulators remain cautious, citing AML concerns. However, since Korea’s adoption of the FATF Travel Rule and improved compliance infrastructure, oversight capabilities have strengthened significantly.

Allowing multiple banking relationships doesn’t inherently increase risk—it may actually improve transparency through diversified audit trails.

4. The Long Road Toward a KRW-Backed Stablecoin

While South Korea has prioritized its central bank digital currency (CBDC), known as Project Han-Gang, demand for private-sector KRW-pegged stablecoins is growing.

Candidates have begun addressing this:

Despite political interest, immediate rollout is unlikely. Any viable KRW stablecoin requires:

Regional momentum adds pressure. Singapore and Hong Kong are actively advancing local-currency stablecoins. To remain competitive as a financial hub, South Korea may eventually need to follow suit—but expect a phased, medium-to-long-term approach.

FAQ: Your Questions Answered

Q: When is South Korea’s presidential election?
A: The election is scheduled for June 3, 2025.

Q: Will crypto taxes definitely be implemented before 2027?
A: While not guaranteed, growing institutional participation makes early implementation likely. A legislative push could come within 12–18 months post-election.

Q: How would a spot Bitcoin ETF benefit retail investors?
A: It would offer regulated, low-cost exposure to Bitcoin through familiar brokerage accounts—reducing entry barriers and custody risks.

Q: Could abolishing the “one bank” rule increase fraud risks?
A: Not necessarily. Enhanced monitoring tools and compliance standards make multi-bank integration feasible without compromising AML integrity.

Q: Is a Korean won stablecoin imminent?
A: No. While politically supported in principle, operational deployment will require extensive legal groundwork—likely taking several years.

Q: How might these changes affect global crypto markets?
A: Increased regulation may shift short-term volume offshore, but long-term institutional adoption and product innovation could strengthen Korea’s role as a Web3 gateway to Asia.

Conclusion: Gradual Yet Inevitable Transformation

The path forward won’t be abrupt—but it is clear. Whether it's ending tax exemptions, launching ETFs, liberalizing banking access, or laying groundwork for local stablecoins, South Korea is moving toward a more mature, structured digital asset ecosystem.

For global investors and Web3 builders, staying informed isn’t optional—it’s essential.

👉 Stay ahead of regulatory shifts and capitalize on next-gen crypto opportunities today.