The new South Korean President Lee Jae-myung promotes reforms in cryptocurrency monetary policy

The South Korean Election Commission announced that the results of the 21st presidential election show that Lee Jae-myung was elected as the new president with a voter turnout of 49.42%. His vote count reached 17,287,513, setting a record for the highest number in history.

It is noteworthy that in this South Korean presidential election, cryptocurrency policy has become a hot topic among the candidates of various parties for the first time. Lee Jae-myung discussed virtual assets as part of the "fair economy" in his policy commitments, stating that after taking office, he will focus on "making South Korea a digital asset center" to lay the foundation for nurturing the virtual asset industry.

Lee Jae-myung's Crypto Assets Policy Proposition

Lee Jae-myung demonstrated a positive attitude towards Crypto Assets as early as his campaign in 2022. He raised campaign funds through the issuance of NFTs, becoming the world's first presidential candidate to adopt this method. He stated that he would actively support the establishment of the digital asset ecosystem, including creative digital asset issuance, secure trading and storage, indirect investments, and diversifying investment risks through insurance.

Lee Jae-myung also pointed out that after taking sufficient protective measures to safeguard investors and prevent market turmoil, consideration will be given to allowing Initial Coin Offerings (ICOs). He believes that the previous Democratic government's negative stance towards virtual assets was a mistake and expressed regret for this.

Promote the Development of Spot ETFs and Stablecoins

Lee Jae-myung promised to support the asset appreciation of young people, clearly stating that he would institutionalize the virtual asset spot ETF system and build an integrated regulatory system. The Democratic Party of Korea has also established a Digital Asset Committee, dedicated to formulating monetary policy for Crypto Assets and promoting industry development. One of the committee's primary tasks is to formulate the "Basic Law on Digital Assets" to establish a legal framework for Crypto Assets and stablecoins.

In addition, Lee Jae-myung expressed support for issuing a Korean won-pegged stablecoin, advocating for the establishment of a stablecoin market denominated in won to reduce the capital outflow issues caused by foreign currency stablecoins.

Expand the Scope of Institutional Investment

In terms of institutional investment, Lee Jae-myung supports expanding public funds' allocation to Crypto Assets. He proposed allowing the national pension fund and other government agencies to invest in coins after meeting stability standards. The Digital Assets Committee under his campaign believes that the National Pension Service's investment in digital assets is not speculative investment but a diversified investment strategy that aligns with international optimization models.

Relaxing Exchange Regulation and Tax Policies

Lee Jae-myung's regulation of crypto exchanges focuses on introducing a government-led rectification mechanism. He proposed establishing a comprehensive monitoring system to centrally regulate major trading platforms and to be guided by the government to reduce market trading costs. Although Lee Jae-myung himself has not made a clear statement, his team emphasizes accelerating legislation into the second phase to further improve the existing regulatory framework.

In terms of taxation, the Democratic Party, to which Lee Jae-myung belongs, proposed to gradually implement a Crypto Assets transaction tax while significantly increasing the deductible tax-exempt amount. The Democratic Party plans to levy a virtual asset income tax as scheduled in 2024, but will raise the deduction limit for individual trading gains from the current 2.5 million won to 50 million won, in order to alleviate the tax burden on ordinary investors, especially young people.

Conclusion

Lee Jae-myung's victory signals a significant change in South Korea's direction regarding Crypto Assets policy. From "embracing regulation" to "nurturing the industry," and from institutional development to aligning with the capital markets, his "new Crypto policy" has begun to take shape. Against the backdrop of various countries around the world strengthening compliance regulation for crypto assets, whether South Korea can achieve its goal of becoming a "digital asset center" through this round of policy transformation is worth the market's ongoing attention.