The South Korean election may trigger four major changes in the global crypto market

South Korea is set to hold a presidential election on June 3rd. As the third largest crypto market in the world, following the United States and China, changes in South Korea's policies will have a profound impact on the global Web3 industry. This article analyzes four major changes that may arise after the South Korean election and their potential effects.

1. South Korea's Position as a Core Market for Global Web3

With a daily trading volume of $5.4 billion and 9.7 million active users, South Korea has become an important player in the global crypto market. For many global projects, South Korea has become a strategic entry point into the Asian market. The strong interest of South Korean users in altcoins and their active on-chain activities make it a key indicator for measuring the global acceptance of new projects.

2. The Shift in Cryptocurrency Taxation Policies

Currently, the taxation of virtual assets in South Korea has been postponed until 2027. However, as business entities are gradually allowed to enter the crypto market, a comprehensive reform of the tax framework is imperative. The new government is likely to implement taxation ahead of schedule, rather than continuing the postponement policy.

According to international precedents, if taxation is implemented, the trading volume of local exchanges in South Korea may decline by more than 20%. After introducing high tax rates, trading volumes in India and Indonesia decreased by 10%-70% and about 60%, respectively.

3. The Introduction of Cryptocurrency ETFs

All major candidates support the introduction of a Bitcoin spot ETF, making it one of the policies most likely to be quickly advanced after the election. The introduction of the ETF will compete with existing exchanges on fees, potentially lowering the investment threshold and improving market accessibility.

In the long run, the launch of spot ETFs may give rise to more innovative financial products, such as derivatives and index funds that integrate encryption currencies with traditional finance.

4. A Re-examination of the "One Exchange, One Bank" Model

Currently, South Korea implements the "one exchange, one bank" principle, where each licensed crypto exchange can only collaborate with one commercial bank. This model is under pressure for reform, and the People Power Party has included the abolition of this rule in its campaign promises.

Allowing multiple banks to cooperate may enhance market competition, bringing users lower fees and more innovative services. However, regulators are cautious about this, and any changes may require long-term review.

5. The Development of the Korean Won Stablecoin

Despite South Korea's prior focus on the development of central bank digital currency ( CBDC ), the demand for the Korean won stablecoin is growing. Major candidates have expressed support for the development of the Korean won stablecoin, but there is currently still a lack of detailed policy framework.

Considering regional trends, particularly the progress of local currency stablecoins in Singapore and Hong Kong, South Korea may face pressure to follow suit in order to maintain the competitiveness of its financial center. However, this process is expected to be advanced in a phased medium to long-term manner.

Conclusion

Although these policy changes are significant for the industry, they are unlikely to be fully realized in the short term. Regulatory changes are expected to be gradually promoted and discussed in parallel with other urgent policies. However, the trend of transformation has already been clarified.

Investors and market participants should prepare for an increasingly regulated and compliant policy environment. The eventual implementation of taxation on cryptocurrencies has become inevitable, and legislative discussions surrounding the issuance of security tokens (STO) are also expected to resume. Stakeholders need to be proactive and prepare for the upcoming changes.