Original Author: Ryan, Tiger Research
This report, written by Tiger Research, analyzes four major changes in the global cryptocurrency market triggered by South Korea's presidential election on June 3rd.
Key Points Summary
South Korea as a Core Web3 Hub: With a daily trading volume of $5.4 billion and 9.7 million active users, South Korea is the world's third-largest cryptocurrency market after the United States and China. It serves as a key benchmark for global projects entering Asia.
Tax Implementation May Accelerate Trading Volume Decline: Although cryptocurrency tax implementation is currently postponed until 2027, the new government is likely to implement it earlier. Following international precedents, trading volume could drop by over 20%.
High Likelihood of ETF Approval, Other Reforms May Face Delays: All major candidates support introducing a Bit spot ETF, increasing its early approval probability. In contrast, regulatory reforms for Korean won stablecoins and the "one exchange-one bank" policy are expected to be longer-term agenda items.
1. Is South Korea's June Presidential Election Only a Local Matter?
South Korea is set to hold a presidential election on June 3rd. While this appears to be a local political event, its impact has transcended national boundaries due to the country's influence on the global cryptocurrency market.
Source: Tiger Research
South Korea is widely considered the third-largest key market for Web3 projects after the United States and China. This status is not merely a result of marketing strategy. According to the Financial Services Commission's 2024 report, South Korea's daily cryptocurrency trading volume reaches 7.3 trillion Korean won, with over 20 million registered accounts and 9.7 million active users.
Investor behavior further solidifies this position. South Korean users have consistently shown strong interest in Altcoins beyond Bit and Ethereum. The on-chain activity is also highly active, making South Korea a valuable indicator of new projects' global market acceptance.
For many global projects, establishing a business in South Korea has become a strategic entry point into the broader Asian market. This makes the upcoming election particularly significant, as key campaign issues now include cryptocurrency taxation, Korean won stablecoin regulation, and cryptocurrency ETF approval.
These developments are not limited to domestic stakeholders. Global investors and project operators must also pay attention to the election results. Both regulatory tightening and relaxation are possible, and projects with a large Korean user base may be particularly sensitive to the policy direction set by the next government.
2. What Changes Will Occur After the South Korean Presidential Election?
Source: Tiger Research
2.1. End of Cryptocurrency Tax Deferral Policy
... [rest of the text continues in the same manner]As the presidential campaign unfolds, political parties begin to take their positions. On April 28, the National Power Party included the abolition of the "one exchange, one bank" rule in its "seven digital asset commitments". The Democratic Party seems to be internally reviewing this matter. However, a cautious attitude emerged within the Democratic Party afterward, and it is currently unclear whether this issue will be reflected in the official campaign promises. Financial regulators also maintain a cautious stance, indicating that any changes may require long-term deliberation.
Although regulatory caution is necessary, maintaining the current model based on concerns about market concentration and anti-money laundering risks may need to be reconsidered. The view that this rule can prevent market monopoly is becoming less convincing, as Upbit and Bithumb already control about 97% of the domestic market. Allowing multiple bank collaborations can enhance competition by enabling exchanges to serve a broader user base. This could bring lower fees and more innovative services for retail and institutional users.
Concerns about anti-money laundering risks also require more nuanced assessment. In fact, greater risks occur during overseas exchange transfers. Since the implementation of the Travel Rule and improvement of compliance infrastructure, South Korea now operates under stricter international monitoring standards. In this context, the systemic risks brought by allowing multiple bank relationships seem exaggerated.
2.4. Korean Won Stablecoin
Historically, South Korea has prioritized central bank digital currency (CBDC) development over stablecoins. The Bank of Korea is currently conducting a pilot program called "Project Han-Gang" to test CBDC-based payment and settlement systems. However, with the global trend shifting towards stablecoins, domestic demand for Korean Won stableeccogrowing.
Source: 21st Presidential Debate: First Presidential Debate
Lee Jae-myung (Democratic Party):
May 8: In economic YouTube interview, stated that a Won-based stablecoin could prevent capital outflow by creating domestic alternatives.<>18: The feasibility of Lee Jae-myung's proposal, citing a lack in anti-money laundering measures for stablecoin ispproduction.
Kim Woo-sung (National Power Party):
April Regulatory frameworkcoin its "seven digital asset commitseven digital digital asset commitments".presidential May 18 brought stablecoins into mainstream political discourse through the exchange between Lee Jae-myung and Lee J-While the discussion showed directional support it also highlighted the lack of detailed policy frameworks—especially risk mitigation and.
At this stage, proposals for aKKorean Won stablecoin remain visionary rather than operational. Immediate implementation after the election is unlikely. However, regional considering the regional trend—especially in Singapore and Singapore and Hong Kong, Kong where authorities are actively developing locally-pegged stablecoins—South Korea may face increasing pressure to follow suit to maintain its competitiveness as a financial financial center.
meaningful progress will require a fundamental legal and regulatory framework. Key issues include include determining qualified issuers, ensuring collateral transparency, establishing anti-money laundering protocols, and defining the relationship between stablecoins and CBDC plans. Given the complexity of policy development complexity, policy advancement is expected to a begradual and medium to long-term, rather rapidly changing after the election.<>Therefore, regulatory changes are expected to be gradual, with discussions running parallel to more urgent policy matters. However, the trajectory is clear: transformation is inevitable.>previously mentioned taxation implementation is inevitable., discussions around security token offerings (STO) are expected to resume. Stakeholders should not underestimate these transformations. Stakeholders must begin preparing for an increasingly regulated and compliant policy environment.
