South Korea to Introduce 5% Crypto Holding Limit for Companies and Professional Investors
South Korea plans to limit corporate and professional crypto holdings to 5% of equity, directing most institutional inflows to the top 20 coins while finalizing ETF and stablecoin rules. The move aims to balance the growing demand for cryptocurrency investments with the need to maintain market stability.
Key Highlights of the Draft Guidelines
The draft guidelines stipulate that companies will only be allowed to purchase the top 20 coins by market capitalization, although whether to include dollar stablecoins such as USDT is still being debated. The final rules, expected in February, will add price limits and split trading to curb volatility as institutions enter the market, likely concentrating liquidity on Bitcoin and possibly Ethereum.
The upcoming Digital Asset Basic Act will establish Won stablecoin rules and open the door to South Korea’s first spot crypto ETFs, considered crucial to the local market structure. The Financial Services Commission (FSC) is taking a cautious approach to expanding institutional crypto access while maintaining market stability amid growing corporate interest.
Impact on the Crypto Market
According to analysts, the 5% limit may not be a significant limitation as most companies are unlikely to exceed it in the early stages. However, the cap will likely improve liquidity but concentrate flows on Bitcoin (BTC) and possibly Ethereum, with the impact on smaller altcoins limited. Market participants are eyeing the country’s upcoming Digital Asset Basic Act, expected in the first quarter, which will reportedly formalize regulations for stablecoins pegged to the won and introduce the country’s first spot exchange-traded cryptocurrency funds.
Stablecoin rules are seen as particularly influential for South Korea’s broader crypto ecosystem. The FSC’s actions reflect a cautious approach to expanding institutional crypto access while maintaining market stability. For more information, visit https://crypto.news/south-korea-crypto-bulls-face-make-or-break-test-at-5-cap/
