In the lead-up to the parliamentary election in South Korea, political campaigns are tapping into the country’s vibrant cryptocurrency market as a means to sway voters. This strategic move underscores the growing influence of digital assets in the socio-political landscape.
Both major political factions, namely President Yoon Suk Yeol’s People Power Party and the opposition Democratic Party, have incorporated promises related to cryptocurrencies into their campaign agendas. This demonstrates a keen awareness of the significance of the crypto industry to a substantial segment of the electorate.
The People Power Party has made commitments to postpone the enforcement of a proposed tax on digital assets. This pledge resonates strongly with voters who are invested in or involved with cryptocurrencies, signaling an understanding of their concerns and priorities.
Conversely, the Democratic Party has taken a different approach by focusing on advocating for the removal of barriers to exchange-traded funds (ETFs) in the crypto sphere. Specifically, they are pushing for the relaxation of restrictions on ETFs holding US-based Bitcoin products. This stance reflects a broader effort to promote greater accessibility and participation in the global cryptocurrency market among South Korean investors.
South Korea aims to provide access to ETFs.
Hwanseok Choi, a policy specialist from the Democratic Party, has affirmed their support for including both domestic and overseas ETFs, as reported by Bloomberg.
The push to allow ETFs directly investing in Bitcoin gained momentum after the US greenlit such products in January. These Bitcoin ETFs have already amassed approximately $57 billion in assets.
However, South Korea’s securities regulator has voiced concerns that facilitating these products locally could potentially breach the law, leading to confusion and market impacts.
While the People Power Party’s manifesto does not directly tackle this issue, it pledges to delay the imposition of planned taxes on crypto gains beyond the initially scheduled timeframe of 2025.
South Koreans have actively engaged in the recent crypto bull market, showcasing enthusiasm for various cryptocurrencies beyond Bitcoin. Upbit, the largest domestic crypto exchange, consistently ranks among the top global platforms in terms of trading volume.
Last month, South Koreans invested over $200 million in shares of MicroStrategy Inc., a US-listed company holding Bitcoin. They also exhibited interest in US crypto-futures ETFs, which are authorized products.
South Korean political candidates possess digital assets.
It’s intriguing to note that even candidates vying for election in South Korea have embraced the world of cryptocurrencies, with about 7% of them disclosing ownership of digital assets, as reported by Yonhap.
Despite the inherent risks associated with the crypto market, the recent surge in its valuation has cast a shadow over past setbacks. This surge in value has drawn attention not only from investors but also from regulatory authorities.
South Korea is gearing up to implement an investor-protection framework in July, signaling a proactive approach toward regulating the industry. Both major political parties have expressed their intent to pursue broader regulations for cryptocurrencies, reflecting the growing importance of regulatory oversight in this rapidly evolving sector.
Recent reports indicate that South Korea is poised to introduce stricter regulations for token listings on exchanges, particularly focusing on preventing the trading of tokens that have been involved in hacking incidents.
Financial authorities are currently in the process of finalizing guidelines for supporting virtual asset trading, with an expected release by the end of this month or early next month. These guidelines are set to establish criteria for the listing of virtual assets, stipulating that assets with a history of hacking or security breaches will not be eligible for listing unless certain conditions are met.
Moreover, the guidelines will require overseas virtual assets seeking listing to provide a white paper or technical manual for domestic reference, with certain exceptions for assets traded on overseas exchanges for an extended period. These measures underscore the government’s commitment to fostering a safer and more transparent environment for virtual asset trading.
read more on: As South Korea’s People Power Party is advocating for an extension of cryptocurrency tax implementation.
