Three measures in one week in South Korea raise concerns: selling Bitcoin, excluding stablecoins, and restricting exchange shareholdings

South Korea has introduced three policy measures related to cryptocurrencies within one week, sparking industry concerns about the direction of regulation. These measures are: the sale of 320.88 Bitcoins recovered by the Gwangju District Prosecutors’ Office; the Financial Services Commission (FSC) plans to exclude USDT and USDC from new corporate investment guidelines; and an agreement between the Democratic Party and FSC to set a 34% ownership cap for major shareholders of cryptocurrency exchanges.

Analysis of the Three Measures

Measure 1: Sale of 320 Bitcoins Recovered

On March 10, the Gwangju District Prosecutors’ Office announced that over 11 days from February 24 to March 6, they sold in batches a total of 320.88 Bitcoins, earning approximately 31.59 billion Korean won (about $21.6 million), which was deposited into the national treasury. These Bitcoins originated from a case where a mother and daughter involved in illegal online gambling were convicted; during the transfer in August 2025, staff mistakenly accessed a phishing website, leading to theft of the funds, which were successfully recovered after coordinating with exchanges and freezing assets in January 2026.

The market’s concern was not the sale itself—asset liquidation following confiscation is standard procedure—but rather Korea’s choice to liquidate immediately, contrasting with the current U.S. approach under the existing government, which holds seized Bitcoins as long-term state assets.

Measure 2: Exclusion of Stablecoins from Corporate Investment Guidelines

The FSC is developing guidelines to allow listed companies to invest in digital assets, but stablecoins such as USDT and USDC are expected to be excluded. The reason is that, under Korea’s Foreign Exchange Transactions Act, stablecoins are not recognized as legal means of external payment. Allowing companies to hold stablecoins could implicitly imply acceptance of their use for payments, which regulators are cautious about until the law is amended. A legislative revision recognizing stablecoins as payment tools was submitted to the National Assembly in October 2025 and is still under review. Some exporters have lobbied to include USDC, citing its foreign exchange hedging value in international transactions.

Measure 3: 34% Ownership Cap for Major Shareholders of Exchanges

The Democratic Party’s Digital Asset Working Group and the FSC reached an agreement to set a 34% ownership limit for major shareholders of cryptocurrency exchanges. This figure aligns with the 33.4% minority shareholder threshold in the Commercial Act, higher than the previously discussed 15% to 20%. However, during a parliamentary hearing on March 9, opposition lawmakers pointed out that similar precedents do not exist in the U.S. or Europe; the National Assembly Research Service raised concerns about potential constitutional conflicts between property rights and traceability legislation; academic critics worry about the “bystander effect”—a highly dispersed ownership structure could hinder decision-making during crises. The most immediate test will be the pending merger between Upbit operator Dunamu and Naver Financial, with regulators reportedly considering separate recognition of the founders’ “ownership interests” and Naver’s “partner interests.” Party negotiations have been postponed from March to April.

Signal Accumulation: How the Market Interprets This Week

Individually, each measure has a reasonable rationale: asset liquidation is standard; the stablecoin exemption reflects legal gaps rather than a policy shift; the ownership cap is seen as a protective measure to prevent exchange failures. However, markets tend to interpret policy signals holistically. A series of actions—selling Bitcoin, excluding stablecoins, limiting ownership concentration—often produce a market response greater than the sum of individual parts, especially during the sensitive period when detailed regulations of the Digital Asset Basic Act are still under negotiation.

Frequently Asked Questions

Why did Korea’s prosecutors choose to sell the recovered Bitcoins instead of holding them?
Korea’s current legal practice is to liquidate confiscated assets into cash and deposit them into the national treasury, not to oppose the U.S. strategy of holding Bitcoin as long-term national reserves. The Gwangju Prosecutors’ Office’s sale was specific to a criminal case’s confiscation enforcement and not a policy statement.

Why does Korea exclude USDT and USDC from the corporate investment guidelines?
The FSC’s decision reflects legal conflicts rather than opposition to stablecoins: Korea’s Foreign Exchange Transactions Act currently does not recognize stablecoins as legitimate external payment tools. Allowing companies to hold stablecoins could implicitly establish a legal status for their use, which regulators are cautious about until the law is amended. This exemption may be temporary, depending on legislative progress in Congress.

What are the main controversies over the 34% ownership cap for exchange major shareholders?
The proposal faces constitutional questions; the National Assembly Research Service pointed out potential conflicts with property rights and traceability legislation. Academic critics warn that overly dispersed ownership could lead to the “bystander effect,” weakening crisis decision-making. Final details are still under negotiation, with discussions postponed from March to April.