South Korea Sees Institutional Exit from Crypto Holdings
South Korea has witnessed the first notable instance of an institutional investor divesting cryptocurrency assets following the government's decision to lift its long-standing ban on crypto trading by financial institutions. This marks a significant moment in the country's evolving digital asset landscape, as regulatory shifts continue to reshape market dynamics and investor behaviour.
The institution in question, a major South Korean asset management firm, has reportedly sold off a substantial portion of its cryptocurrency portfolio. This move comes amid growing caution within the sector, despite regulatory relaxation intended to encourage wider institutional participation. Analysts suggest that the sale signals a pragmatic reassessment by financial entities, weighing regulatory clarity against market volatility and emerging geopolitical risks.
South Korea's approach to cryptocurrency regulation has long been characterised by stringent restrictions designed to curb speculation and protect investors. The ban on crypto holdings by institutional investors, introduced several years ago, effectively excluded major banks, pension funds, and asset managers from direct crypto market involvement. This policy, aimed at stabilising the financial system, has limited the scale and scope of institutional crypto activity compared to other leading markets.
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However, government authorities have recently signalled a more open stance, allowing institutions to hold and trade digital assets under stricter compliance and transparency frameworks. The removal of the ban reflects a broader effort to position South Korea as a competitive hub for blockchain technology and crypto innovation while addressing investor protection concerns. Regulatory bodies have emphasised enhanced due diligence, anti-money laundering measures, and consumer safeguards as prerequisites for institutional engagement.
Despite the regulatory easing, the initial institutional response appears cautious. The divestment by the asset management firm highlights lingering uncertainties, including the lack of comprehensive global regulatory harmonisation and fluctuating crypto valuations. Financial executives involved in the transaction point to increased scrutiny from compliance teams and internal risk committees, which have recommended a more conservative stance amid the unpredictability of crypto markets.
Market observers note that institutional investors have been closely monitoring international regulatory developments, including regulatory crackdowns in major economies such as the United States and the European Union. These external pressures, combined with domestic regulatory adaptations, create a complex environment where institutional players must balance opportunity with risk management.
South Korea's crypto market itself continues to show robust retail participation, with local exchanges reporting increased trading volumes and new account openings. However, institutional activity remains limited, constrained by cautious regulatory interpretations and the need for clearer operational guidelines. Industry insiders indicate that infrastructure development, such as secure custody solutions and regulatory-approved trading platforms, will be critical to attracting sustained institutional capital.
The government's gradual liberalisation has also been accompanied by initiatives to bolster blockchain technology development and related financial products. South Korean regulators are promoting pilot projects and innovation hubs, fostering partnerships between traditional finance firms and crypto startups. These efforts aim to build an ecosystem that supports not only trading but also tokenisation, decentralized finance applications, and digital asset custody.
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Analysts highlight the importance of regulatory certainty for institutional confidence. The absence of clear rules has historically driven many South Korean financial institutions to adopt a wait-and-see approach, fearing potential legal repercussions and reputational damage. The recent institutional exit underscores the delicate balance regulators must maintain between fostering innovation and imposing adequate safeguards.
Investor sentiment is further influenced by macroeconomic factors, including global interest rate trends, currency fluctuations, and geopolitical tensions impacting asset flows. Cryptocurrency's volatility relative to traditional assets remains a key consideration for institutional portfolio managers. Many firms are adopting phased approaches, initiating pilot crypto investments or forming dedicated teams to evaluate blockchain's long-term potential before committing substantial capital.
The South Korean government's broader digital finance strategy integrates cryptocurrency within its fintech agenda, aiming to create a sustainable and regulated market environment. However, achieving widespread institutional adoption will require ongoing dialogue with industry stakeholders, continuous regulatory refinement, and enhanced transparency mechanisms.
The current institutional crypto divestment could serve as a valuable indicator for regulators and market participants alike, revealing the challenges and reservations that remain despite policy shifts. Financial institutions appear to be navigating a transitional period, balancing innovation enthusiasm with prudent risk controls.
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Web Release
a day ago
- Web Release
EBRD and EU support sustainable and eco-friendly winemaking in Lebanon
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Participants took part in a brainstorming session looking at innovative solutions to help improve their wineries and vineyards. Khalil Dinguizli, Head of Lebanon at the EBRD, said: 'Today's event is a valuable opportunity to highlight the resilience of Lebanon's private sector, particularly its SMEs, which continue to grow despite numerous challenges. The determination of Lebanese entrepreneurs is truly inspiring and lies at the heart of our growing collaboration with the European Union to support the private sector through tailored programmes'. He added: 'At the EBRD, and across everything that we do, we have three institutional priorities we promote and work towards: supporting the Green Transition, supporting the Digital Transformation, and working towards Equality of Opportunity and Inclusion. Today's topic is at the intersection of all three. Since 2018, with EU funding, we've supported over 330 Lebanese SMEs through more than 450 projects and various trainings. 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It also calls for unified efforts among all partners, including government entities, international organizations, universities, experts, and civil society.' Since the start of its operations in Lebanon, the EBRD has invested more than €860 million in the country, focusing on enhancing the competitiveness of the private sector, promoting sustainable energy, and improving the quality and efficiency of public services.
Gulf Today
a day ago
- Gulf Today
S.Korea's leader to seek more time for US trade talks
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The new president and his liberal Democratic Party government inherit an economy that is expected to grow this year by a grim 0.8%, the weakest since 2020, and will need to unify a country deeply polarised by ousted President Yoon Suk Yeol's botched martial law attempt. South Korea and other countries may face further pressure, as a draft letter seen by Reuters showed the Trump administration wanted countries to provide their best offer on trade negotiations by Wednesday. A trade ministry official declined to confirm if Seoul had received the letter. But the transition of power after a six-month leadership vacuum provides Seoul with an excuse to slow down its negotiations and observe Washington's tariff talks with other countries, lawmakers, officials and trade experts from the Democratic Party said. "The new administration will need to take a fresh look at the overall framework of the negotiations and that will be a buffer to buy time, which the US cannot reject," said a trade expert who took part in brainstorming for Lee's trade strategies. The sources added the administration may not be able to immediately ask Trump for an extension, and Lee's top diplomacy adviser has said he sees such a request being considered only after reviewing the progress. Still, prolonged negotiations by other countries may help to buy Seoul time. "It will be strategically right to take a wait-and-see stance because the situation is changing within the United States and around negotiations of other countries," one lawmaker said. South Korea, a major US ally and one of the first countries to engage with Washington after Japan, agreed in late April to craft a "July package" scrapping levies before the 90-day pause on Trump's reciprocal tariffs is lifted, but progress was disrupted by continued upheavals in South Korea's leadership. Lee has since stressed there is no need to rush into clinching a deal and the deadline of July 8 set between Seoul and Washington should be reconsidered. During his election campaign, Lee did not make specific comments about contentious issues around the trade talks. That "silence" was a strategic move, a party official said. In a statement after his victory, the Korea International Trade Association called for Lee to "respond quickly to the rapidly changing foreign trade order" and use all of the government's diplomatic and trade resources to pursue a practical negotiation strategy. Trump's across-the-board tariffs on trading partners, including 25% duties on South Korea, have been the subject of ongoing litigation, but remain in place. "For different reasons, China and Japan will be references for us, with the former on the possibility of US policy changes and the latter on how to make moves under a similar circumstance," another trade expert said. Heo Yoon, an economics professor at Sogang University, says Lee's best bet to win an extension would be by joining the meeting of the Group of Seven advanced economies. "There is a G7 meeting in Canada in mid-June, where South Korea could be invited to join and use it as a chance to extend the tariff-pause deadline," Heo said, adding an extension could also help Washington, as it would sway Lee towards the US and away from China. Japan, another US ally slapped with 24% tariffs, no longer sees merit in striking a quick deal, unless it is granted an exemption from 25% product-specific duties on its key industry of automobiles, also a major sector for South Korea. China agreed with the US to significantly unwind their tariffs on each other in a 90-day truce signed in mid-May, but Trump last week accused Beijing of violating the agreement and threatened to take tougher actions. When it comes to joint responses to US tariffs, there is a higher possibility with Japan than China, two sources said, citing shared interest in energy purchases and auto tariffs. Lee's party expects there to be some "two-track" transitional period, with current officials continuing negotiations as the new administration formulates its strategies, according to the official. Given its strength in key sectors of US interest, such as shipbuilding and technology, some analysts see South Korea as better positioned than others in the region, as Seoul prepares a separate package of industrial cooperation for bargaining power. "Successful outcomes require offers that support the president's domestic agenda, and this will be comparatively easy for Korea given its importance in politically sensitive industries," said Jay Truesdale, a former US diplomat and CEO of TD International, an advisory firm in Washington, D.C. Kathleen Oh, Morgan Stanley's chief Korea and Taiwan economist, said: "We believe there may be more channels and enough scope for Korea to work out a deal compared to, let's say, its exporting peer Taiwan." South Korea has the scope to decrease its trade surplus with the US via more import purchases, while it can also offer lower tariffs on agricultural products, particularly rice, quoted by Trump as a high tariff example, Oh said. But, for the Lee administration, that is more the reason it does not have to rush, the second trade expert said. "In the worst-case scenario, if tariffs are adjusted after we sign an agreement, that might mean we made unnecessary concessions," the source said, adding "it's not like we don't have any leverage".
Dubai Eye
a day ago
- Dubai Eye
South Korea's new President Lee vows to revive democracy from 'near demise'
South Korea's new liberal President Lee Jae-myung pledged on Wednesday to raise the country from what he described as the near destruction caused by a martial law attempt and revive a struggling economy facing global protectionism. Lee's decisive victory in Tuesday's snap election stands to usher in a sea change in Asia's fourth-largest economy, after backlash against a botched attempt at military rule brought down Yoon Suk Yeol just three years into his troubled presidency. He faces what could be the most daunting set of challenges for a South Korean leader in nearly three decades, ranging from healing a country deeply scarred by the martial law attempt to tackling unpredictable protectionist moves by the United States, a major trading partner and a security ally. "A Lee Jae-myung government will be a pragmatic pro-market government," he said after taking the oath of office at parliament, a location where six months ago he jumped over the perimeter wall to enter the chamber and avoid martial law troops barricading it to vote down the decree. He promised deregulation to spur innovation and growth in business and pledged to reopen dialogue with North Korea while maintaining a strong security alliance with the United States. "It is better to win without fighting than to win in a fight, and peace with no need to fight is the best security," he said, referring to his country's often violent ties with rival North Korea. Lee was officially confirmed earlier as president by the National Election Commission and immediately assumed the powers of the presidency and commander in chief, speaking with the top military leader to receive a report on defence posture. With all the ballots counted, Lee won 49.42 per cent of the nearly 35 million votes cast while conservative rival Kim Moon-soo took 41.15 per cent in the polls, the highest turnout for a presidential election since 1997, official data showed. Lee has said he would address urgent economic challenges facing the country on the first day in office with a focus on the cost-of-living concerns affecting middle and low-income families and the struggles of small business owners. "With democracy alive, I hope the president will revive the economy, and have consideration for underprivileged citizens and small business owners," said Kim Eun-kyung, 58, a Seoul resident. The new president also faces a deadline set by the White House on negotiating import duties that Washington has blamed for a large trade imbalance between the countries. South Korean stocks rallied on Wednesday, with the benchmark KOSPI rising more than 2 per cent to a 10-month high, with the financial sector leading the gain on expectations of market reform by Lee. Renewable energy stocks also rose. Lee has pledged a shift to a greener energy mix. 'DEAL WITH TRUMP' In a bid to fill a long-running power vacuum, Lee nominated Kim Min-seok, a four-time lawmaker, as his prime minister on Tuesday. Kim made waves when he predicted in August last year that Yoon may declare martial law, roughly three months before Yoon's short-lived decree to impose martial law. The government under a caretaker acting president had made little progress in trying to assuage crushing tariffs announced by U.S. President Donald Trump that would hit some of the country's major industries, including autos and steel. "President Lee will find himself with little to no time to spare before tackling the most important task of his early presidency: reaching a deal with Trump," the Washington-based Center for Strategic and International Studies said. US Secretary of State Marco Rubio congratulated Lee on his election win and said the countries "share an ironclad commitment" to their alliance grounded on shared values, and deep economic ties. The White House said the election of Lee was "free and fair" but the United States remained concerned and opposed to Chinese interference and influence in democracies around the world, according to a White House official. Lee has expressed more conciliatory plans for ties with China and North Korea, in particular singling out the importance of China as a major trading partner while indicating reluctance to take a firm stance on security tensions in the Taiwan Strait. Still, Lee has pledged to continue Yoon's engagement with Japan and said the alliance with the United States is the backbone of South Korea's global diplomacy.
