South Korea Crypto Future Hinges on June Election and Stablecoin Policy

Crypto takes center stage in South Korea presidential election as candidates clash on stablecoin strategy, ETFs, and regulatory reform—impacting one-third of the crypto-owning population.

As South Korea approaches its presidential election on June 3, digital assets have emerged as a defining issue on the campaign trail. In a country where nearly a third of the population owns cryptocurrency, political candidates are increasingly treating crypto as a central pillar of national innovation—right alongside AI and semiconductors.

Dr. Sangmin Seo, head of the Kaia DLT Foundation, explained: “Crypto has become a strategic narrative in this election. Both political parties recognize the urgency of keeping South Korea competitive with global regulatory advancements.”

Both Democratic Party candidate Lee Jae-myung and People Power Party nominee Kim Moon-soo surprisingly align on one major point: supporting the development of crypto ETFs. But beyond that, their visions diverge sharply, especially when it comes to stablecoins and banking reform.

The Bank of Korea is currently exploring how to integrate deposit tokens with public blockchains, creating a coexistence model with privately issued stablecoins. These tokens, described as stablecoins within the central bank’s own digital currency system, could potentially redefine Korea’s approach to digital finance.

Lee, the current front-runner, advocates for a won-backed stablecoin to combat capital flight, referencing $40.8 billion in Q1 outflows. His policies include building a national crypto monitoring system and lowering transaction costs to encourage regulated investment in crypto.

Kim, in contrast, proposes eliminating the restrictive one-exchange-one-bank rule. He aims to ease the banking limitations placed on crypto firms, cut taxes for the middle class, and support the launch of crypto-related investment funds.

Both candidates’ agendas, however, depend on regulatory alignment. Just last month, the Financial Services Commission revealed plans that will allow non-profits and exchanges to sell digital assets beginning in June. Simultaneously, the Democratic Party announced a Digital Asset Committee to craft comprehensive regulation.

This shifting legal landscape comes amid cautionary tales. The collapse of Terra and the legal fallout from crypto scandals continue to haunt Korea’s image. Seo warns that Korea’s crypto market has been viewed by some as “a dark casino” post-Terra. Nonetheless, both lawmakers and regulators are working with experts from the EU, U.S., Singapore, and UAE to build stronger, consumer-focused regulations.

The conversation around ETFs is also gaining momentum. Though Korean politicians have long flirted with the idea, there has been little movement until now. Tiger Research’s Ryan Yoon emphasized the need to define ETF structures and investor classifications. KP Jang from Xangle added that while won-backed stablecoins may stay within Korea, a fully-collateralized model could add legitimacy and prevent failures like Terra.

Meanwhile, South Korea’s Ministry of Justice is preparing to convert its crypto task force into a permanent investigative unit. The department’s new mandate will include expanded authority to tackle fraud and embezzlement, including high-profile cases such as a recent $500,000 crypto theft involving a woman who drained her boyfriend’s wallet while he slept.

Together, these developments paint a complex but potentially transformative picture for South Korea’s crypto sector. With major policy shifts on the horizon, the results of this election could determine whether the nation becomes a global crypto powerhouse or risks falling behind.

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