South Korea’s regulatory landscape is changing, particularly with the approval of a VASP license to Happy Block, a crypto brokerage. This might mean a shift in policy that will enable companies to use their balance sheets to buy Bitcoin (BTC) and other cryptocurrencies.
On January 21, 2025, South Korea’s Financial Intelligence Unit (FIU), under the Financial Services Commission (FSC), issued a VASP license to Happy Block. It is the second such license issued in recent months, after the Waybridge exchange was licensed in December 2024.
VASP License Approval
Traditionally, since the government imposed strict oversight of the crypto sector in 2018, very few exchanges have managed to secure VASP licenses, which are crucial for the operation of the business in the country.
The FIU is the only institution that is authorized to issue these licenses. Its recent steps may indicate an easing of the strict regulatory environment that has defined South Korea’s approach to cryptocurrencies. FSC has given hints that the reform process regarding crypto regulations will be gradual, and it might be ready to review policies that currently restrict corporate investments in digital assets.
Implications for Corporate Crypto Investments
The approval of Happy Block’s VASP license is considered a significant step towards the free operation of South Korean companies with cryptocurrencies. Firms are largely barred from buying cryptocurrencies as FSC guidelines do not allow banks to open corporate accounts related to crypto exchanges. This prohibition is based on the classification of virtual assets as non-financial investment products under the Capital Market Act.
However, according to industry players, this would also mean that easing these constraints could lead to increased participation of companies in the cryptocurrency market. Happy Block hopes to offer different services, including OTC trading and institutional investor platforms, that can make it easy for companies to access digital assets.
Gradual regulatory changes
Although the FSC has not agreed to deregulate immediately, it has agreed to a gradual approach to reform. The commission has announced that it would first permit public institutions to receive crypto donations before allowing private companies to operate. This is an approach that continues to reflect investor protection and market stability concerns amid the increasing volatility of cryptocurrency prices.
In addition, the regulatory changes could open the doors for Bitcoin spot exchange-traded funds in South Korea. According to a financial insider, if domestic virtual asset ETFs were introduced, demand for brokerage services that can process institutional orders would increase.
Future Outlook
As South Korea continues to navigate these regulatory waters, firms like Happy Block must continue to keep their operations in line with the government’s policies on investor protection and anti-money laundering measures. The CEO of Happy Block has highlighted the importance of dealing with issues such as taxation and compliance with future regulations on spot ETFs.
This, therefore, is a significant change in South Korea’s approach to cryptocurrency regulation, with the granting of VASP licenses to firms like Happy Block. As the government seeks ways of integrating digital assets into its financial system, it will be important for stakeholders to keep track of the changes in policies and their implications for corporate participation in the crypto market.
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FAQs
What is a VASP license?
A VASP license is a license that allows companies to operate legally in the cryptocurrency space within South Korea.
Why are companies currently unable to buy Bitcoin?
Current legislation does not allow banks to open accounts relating to corporate customers and crypto exchanges.
What is in the future for cryptocurrency regulation in South Korea?
The FSC is likely to relax the restrictions on corporate investments in cryptocurrencies gradually and may approve Bitcoin ETFs.
