South Korea's new president Lee Jae-myung promotes reforms in crypto assets monetary policy

South Korea welcomes its new president, Lee Jae-myung. On June 4th, the South Korean Election Commission announced the ballot counting results of the 21st presidential election, with Lee Jae-myung elected with a vote rate of 49.42%. He received 17,287,513 votes, setting a record for the highest number of votes in history. Lee Jae-myung immediately began his term on the 4th and moved the presidential office back to the Blue House.

It is noteworthy that in this South Korean presidential election, cryptocurrency policy has become an important issue for candidates for the first time. To win the support of young voters and the middle class, the main candidates have proposed proactive and progressive crypto assets policy commitments. Lee Jae-myung has positioned virtual assets as an important component of the "fair economy" in his policy agenda, promising to work towards "making South Korea a digital asset hub" and laying the foundation for nurturing the virtual asset industry.

Lee Jae-myung's positive attitude towards Crypto Assets

During the presidential campaign in 2022, Lee Jae-myung demonstrated an open attitude towards Crypto Assets, being seen as trying to gain the support of young voters. He also innovatively raised campaign funds by issuing NFTs, becoming the world's first presidential candidate to adopt this method. At that time, he stated: "Even if we turn a blind eye, the existing market will not disappear. If it cannot be avoided, we must seize the opportunity."

Lee Jae-myung promised to fully support the construction of the digital asset ecosystem, including innovative digital asset issuance, secure trading and storage, indirect investment, and diversifying investment risks through insurance. He also stated that after taking sufficient measures to protect investors and prevent market turmoil, he would consider lifting the ban on initial coin offerings (ICOs).

Promote the development of spot ETFs and stablecoins

Lee Jae-myung promised to create a safe investment environment for young people, helping them accumulate assets and plan for the future. He clearly stated his intention to institutionalize the virtual asset spot ETF system and establish an integrated regulatory framework.

The Democratic Party of Korea has established a Digital Assets Committee, dedicated to formulating monetary policy for Crypto Assets and promoting industry development. The primary task of the committee is to draft the "Fundamental Law on Digital Assets" to establish a legal framework for Crypto Assets and stablecoins. In the future, it will also explore comprehensive virtual asset-related systems covering stablecoins, NFTs, and security token offerings (STOs).

Lee Jae-myung supports the issuance of a Korean won-pegged stablecoin and advocates for the establishment of a stablecoin market denominated in Korean won to reduce the capital outflow issues caused by foreign currency stablecoins. He believes that "a stablecoin linked to the Korean won should be issued to prevent the outflow of national wealth."

expand the scope of institutional investment in Crypto Assets

Lee Jae-myung supports expanding public funds' allocation to Crypto Assets. He proposed allowing the national pension fund and other government agencies to invest in coins after meeting stability standards.

Their campaign team believes that pension investments in digital assets, such as the National Pension, are not speculative behaviors, but rather align with international optimization models and represent a controlled and scientific diversification investment strategy. They plan to establish a system that allows the National Pension to shift from its current indirect investments to direct investments in virtual assets.

Relaxing exchange regulations and reducing Crypto Assets tax burden

Lee Jae-myung proposed the establishment of a comprehensive monitoring system to centralize the regulation of major trading platforms, with the government guiding efforts to reduce market transaction costs. Although he has not made a clear statement himself, his team emphasizes the need to accelerate legislation and further improve the regulation of exchanges under the existing regulatory framework. These policies suggest that he is inclined to relax exchange regulations and enhance market competitiveness.

In terms of taxation, the Democratic Party led by Lee Jae-myung proposed to gradually implement a tax on Crypto Assets trading, while significantly raising the deductible tax-free amount. They plan to increase the deduction limit for individual trading gains from 2.5 million won to 50 million won, in order to alleviate the tax burden on ordinary investors, especially young people.

Conclusion

Lee Jae-myung's election not only signifies a shift in the political landscape of South Korea but also suggests that the country may be on the verge of a significant transformation in its policy direction regarding Crypto Assets. From institutional development to alignment with the capital markets, the outline of his "new policy on encryption" is beginning to take shape. Against the backdrop of many countries around the world strengthening compliance regulations for Crypto Assets, whether South Korea can achieve the goal of becoming a "digital asset center" through this round of policy changes is worth the market's continued attention.