South Korea plans to allow companies to invest in cryptocurrencies! But they are not allowed to buy USDT and USDC. What is the reason behind this?

South Korea plans to lift restrictions on corporate investments in digital assets, excluding stablecoins like $USDT and $USDC. Foreign exchange regulations and capital outflows are the main concerns.

South Korea to Allow Corporate Investment in Digital Assets but Excludes Stablecoins

South Korea’s financial regulators are working on establishing “Guidelines for Corporate Virtual Asset Trading,” aiming to allow listed companies and professional institutional investors to participate in crypto trading for the first time in nearly nine years of bans. However, according to local media outlet Korea Pioneer, the upcoming framework may exclude USD-pegged stablecoins such as $USDT and $USDC from permitted investments.

This policy is led by the Financial Services Commission (FSC) and aims to create a regulatory structure for corporate participation in the crypto market. If implemented, listed companies and certified professional investors could hold digital assets like Bitcoin ($BTC) and Ethereum ($ETH) for investment or financial management purposes. However, during policy discussions, regulators reached a consensus that stablecoins should not be included as investment targets for companies. This means that even if South Korean companies are legally allowed to invest in crypto assets in the future, they may not be permitted to hold dollar-pegged stablecoins like $USDT and $USDC under the official system.

Foreign Exchange Regulations as Main Barrier

The primary reason for excluding stablecoins is their conflict with current foreign exchange laws. Under these laws, all cross-border fund transfers generally must be processed through licensed foreign exchange banks.

Currently, stablecoins are not legally recognized as official foreign payment instruments. Allowing companies to treat stablecoins as investment assets could create legal contradictions. Companies might legally hold stablecoins but be prohibited from using them for cross-border payments.

Regulators believe that, without amendments to existing laws, permitting companies to hold stablecoins could enable direct use of these “digital dollars” for overseas payments, bypassing foreign exchange controls.

South Korea’s National Assembly is currently reviewing a proposed amendment to the Foreign Exchange Transactions Act, which aims to recognize stablecoins as legitimate payment tools. However, before passing the bill, the government prefers to maintain a cautious stance to avoid legal conflicts.

Companies Seek to Use Stablecoins for FX Hedging

Despite regulatory caution, some South Korean companies have a strong demand for stablecoins. Especially those engaged in large import-export businesses see stablecoins as a new tool for foreign exchange management.

Businesses point out that stablecoins offer real-time exchange rates, low-cost cross-border transfers, and 24/7 settlement, which can help reduce currency fluctuation risks and improve international transaction efficiency. Some companies have even proposed using stablecoins for hedging strategies, such as holding dollar-pegged stablecoins during volatile exchange periods to mitigate the impact of won fluctuations on financial statements.

However, under the current policy direction, these demands are not reflected in the new guidelines. Regulators believe that allowing widespread stablecoin use in the early stages of market opening could increase speculative risks and capital outflows.

Regulatory Tensions Between Stablecoins and Industry Development

Although stablecoins are excluded from the corporate investment framework, South Korea has not banned their trading outright. Companies can still hold stablecoins through overseas exchanges, OTC platforms, or personal wallets like MetaMask, but these activities cannot be conducted via official corporate accounts. This creates a gray area in the market. On one hand, companies can access stablecoins; on the other, regulators have yet to establish a comprehensive legal framework.

The South Korean government is currently pushing for the second phase of the “Digital Asset Basic Act,” aiming to build a complete infrastructure for the digital asset market, including mechanisms for institutional investors and stablecoin issuance. Discussions also include promoting a Korean won stablecoin ecosystem. Some proposals suggest that stablecoin issuers should have at least 5 billion KRW in capital and be majority-owned by banks to ensure financial stability.

South Korea has about 3,500 listed companies. Once institutional crypto investment regulations are officially opened, the market could expand rapidly. However, until stablecoin regulation and foreign exchange systems are integrated, corporate use of stablecoins will remain uncertain and subject to policy risks.

This article is a compilation of information from various sources by Crypto Agent, reviewed and edited by Crypto City. As it is still in training, there may be logical errors or inaccuracies. Content is for informational purposes only and should not be considered investment advice.