South Korea kicked off 2025 with political chaos, regulatory heat and a crypto market finally brought to heel

The nation closed 2024 in disarray following then-President Yoon Suk Yeol’s botched martial law stunt in December.

South Korea kicked off 2025 with political chaos, regulatory heat and a crypto market finally brought to heel – or at least forced to grow up.

The nation closed 2024 in disarray following then-President Yoon Suk Yeol’s botched martial law stunt in December. In the aftermath, authorities spent the first quarter drawing lines in the sand as financial watchdogs slapped cryptocurrency exchanges with probes and lifted the ban on corporate trading accounts. Meanwhile, crypto adoption hit record highs as trading volume cooled.

Here’s a breakdown of the key developments that shaped South Korea’s crypto sector in Q1 of 2025.

South Korean crypto traders given yet another two-year tax exemption

Jan. 1 – Crypto tax postponed

A planned 20% capital gains tax on crypto did not take effect on Jan. 1 as lawmakers agreed to delay it until 2027. This was the third postponement: first from 2022 to 2023, then again to 2025.

Related: Crypto’s debanking problem persists despite new regulations

The latest delay, reached through bipartisan consensus in late 2024, came amid mounting economic uncertainty and political turmoil. Lawmakers cited fears of investor flight to offshore exchanges, challenges in tracking wallet-based profits, and shifting national priorities in the wake of Yoon’s failed martial law stunt and subsequent impeachment.

Jan. 14 – Warning against North Korea crypto hackers

The US, Japan and South Korea published a joint statement on North Korean cyber threats. Crypto firms were warned to guard against malware and fake IT freelancers. Lazarus Group, the state-sponsored cyber threat group, was named as a prime suspect in some of the top hacks in 2024, such as the $230-million hack on India’s WazirX and the $50-million hack against Upbit, South Korea’s largest crypto exchange.

Jan. 15 – Companies wait on sidelines for crypto greenlight

South Korea’s Virtual Asset Committee, a crypto policy coordination body under the Financial Services Commission (FSC), held its second meeting. The FSC was widely expected to approve corporate access to trading accounts on local exchanges. Despite popular demand, the FSC held off on making an official decision, citing the need for further review.

Instead, the FSC announced investor protections against price manipulation and stricter stablecoin oversight.

Jan. 16 – First enforcement of crypto market manipulation

South Korean authorities indicted a trader in the first pump-and-dump prosecution under the Virtual Asset User Protection Act, the new crypto law effective from July 2024.

Meanwhile, Upbit received a suspension notice for allegedly violating Know Your Customer (KYC) requirements in over 500,000 instances, prompting regulators to consider a ban on new user registrations.

Jan. 23 – Upbit, Bithumb to compensate users after service outages during martial law

Upbit and rival exchange Bithumb announced plans to compensate users following service disruptions triggered by the surprise declaration of nationwide martial law on Dec. 3, 2024. The shocking move caused panic across financial and crypto markets, leading to a surge in traffic that overwhelmed local trading platforms.

South Korean crypto world finally opened to corporations

Feb. 13 – Charities and universities get first dibs on corporate crypto access

The FSC unveiled its long-awaited plan to allow corporate entities to open crypto trading accounts in phases by late 2025. The rollout will require businesses to use “real-name” accounts and comply with KYC and Anti-Money Laundering (AML) regulations. Charities and universities are first in line and will be allowed to sell their crypto donations starting in the first half of the year.

South Korea’s real-name financial transaction system, introduced in 1993, was designed to combat tax evasion and money laundering by requiring all bank accounts to be opened under verified legal names using national IDs.

Related: Market maker deals are quietly killing crypto projects

Crypto trading exploded in 2017, driven in part by anonymous accounts from businesses, foreigners and minors. Financial authorities responded by requiring crypto exchanges to partner with domestic banks and offer fiat services only through verified real-name accounts. To date, only five exchanges have met the requirements.

Since there was no regulatory framework for real-name corporate accounts, this policy effectively shut out both overseas users and domestic companies from trading on South Korean exchanges. The new roadmap aims to fix that by creating a formal structure for institutional participation under tighter compliance standards.

Feb. 21 – Alleged serial fraudster busted again

Police rearrested “Jon Bur Kim,” identified by the surname Park, for allegedly profiting 68 billion won (approximately $48 million) in a crypto scam involving the token Artube (ATT). He allegedly employed false advertising, pump-and-