South Korea's Crypto Policy Shift: Lee Jae-myung's Plan to Build a "Digital Asset Hub"

When Lee Jae-myung assumed office as South Korea’s new president on June 4, 2025, after winning 49.42% of the vote—the highest in the nation’s electoral history—few realized that his victory would fundamentally reshape how the country approaches cryptocurrency regulation. For the first time in a presidential election, crypto policy became a central campaign issue, and Lee’s election marks a potential turning point for digital asset adoption in Asia’s fourth-largest economy.

The Cryptocurrency Question Enters Mainstream Politics

What makes this election historic isn’t just the voting numbers, but the fact that both major candidates prioritized cryptocurrency policy. Lee Jae-myung of the Democratic Party and his rival Kim Moon-soo both courted young voters and the middle class by proposing progressive virtual asset frameworks. This shift reflects a broader recognition that crypto has moved beyond niche investors—it’s now an electoral issue.

Lee’s campaign centered on positioning Korea as a “digital asset center” while framing crypto investment as part of building a fairer economy. This contrasts sharply with previous administrations’ defensive posture toward the industry. During his tenure at local government levels, he had already demonstrated openness to digital innovation, raising campaign funds through NFT issuance—a world first for any presidential candidate.

From Skepticism to Opportunity: Lee’s Historical Position

Back in 2022, when competing against then-frontrunner Yoon Seok-yeol, Lee articulated a pragmatic philosophy toward digital assets: “If we can’t avoid it, we must seize the opportunity.” Rather than treating crypto as a regulatory problem, he positioned it as an economic opportunity Korea shouldn’t miss.

His statements then revealed a strategic thinking: support for a comprehensive digital asset ecosystem encompassing token issuance, trading infrastructure, custody solutions, and investment diversification. He also publicly apologized for the Democratic Party’s historical opposition to virtual assets, calling it “a wrong decision that hinders normal market development.”

This consistency between his 2022 positions and 2025 campaign promises suggests his pro-crypto stance isn’t opportunistic—it reflects a genuine policy conviction.

The 2025 Agenda: Concrete Policy Framework

Since his election, Lee has moved quickly to translate rhetoric into institutional action. In May 2025, he established the Digital Asset Committee under the Democratic Party to architect specific regulations covering stablecoins, NFTs, spot ETFs, and security token offerings.

Attracting Institutional Capital

One of the committee’s most significant proposals: allowing the National Pension Fund and government agencies to invest directly in crypto assets, provided stability standards are met. Currently, pension funds participate in digital assets only through indirect investment vehicles. This expansion would unlock substantial capital inflows—the National Pension Service manages approximately 900 trillion won, and even a modest allocation would reshape market liquidity.

The committee framed this not as speculation, but as diversified asset allocation in line with “international optimization models.” By legitimizing crypto in institutional portfolios, the policy would create a ripple effect: if government pension funds invest in digital assets, retail confidence typically follows.

Stablecoin Strategy and Capital Controls

A particularly notable initiative: promoting Korean won-pegged stablecoins. Currently, exchanges rely on US dollar stablecoins (USDT, USDC) due to regulatory prohibitions on local alternatives. This creates capital outflow problems—wealth leaves Korea in the form of foreign currency stablecoins.

Lee’s proposed solution addresses both policy and economics: local stablecoin issuance would keep capital within Korea’s financial system while building infrastructure for crypto trading. He compared the previous government’s resistance to “the closed-door policies of late Joseon Dynasty”—a pointed historical metaphor suggesting the cost of isolating yourself from inevitable technological shifts.

Tax Relief and Market Accessibility

On taxation, Lee’s approach balances revenue collection with market development. Rather than the 20% tax the previous Yoon government proposed, the Democratic Party plans a more investor-friendly structure: implement the tax as scheduled but raise the personal income deduction threshold from 2.5 million won to 50 million won. This effectively shields ordinary investors while capturing taxes on larger gains.

This philosophy—lighter regulatory touch combined with smart taxation—creates conditions for market growth without abandoning government revenue.

Regulatory Modernization

Lee also advocated relaxing the current “1 exchange - 1 bank” rule that restricts each exchange to a single banking partner. Originally designed to prevent money laundering, the restriction artificially limits market competition and increases transaction costs for traders. His committee has signaled openness to allowing exchanges to partner with multiple banks while maintaining anti-money laundering oversight through a government-led monitoring system.

What This Means for Crypto Markets

Lee’s election sets up an intriguing test case: can a major Asian economy build a thriving crypto ecosystem while maintaining regulatory discipline? The policy bundle—institutional investment access, stablecoin infrastructure, tax incentives, and banking flexibility—creates a coherent strategy rather than piecemeal decisions.

For global crypto markets, South Korea’s policy direction matters. As a financially sophisticated nation with strong tech adoption, Korea’s regulatory model influences how other countries approach similar questions. If Lee’s policies succeed in building infrastructure without breeding fraud, the “Korea model” could inspire similar frameworks elsewhere.

Conclusion

Lee Jae-myung’s presidency represents more than a political shift—it signals Korea’s intent to position itself as a digital asset destination rather than merely a market. From embracing regulatory clarity to fostering institutional participation, his administration has begun constructing the framework needed for sustainable crypto growth. Whether these ambitious plans translate into market reality will depend on implementation, but the policy direction has unmistakably changed. For investors and industry observers, this South Korean moment deserves sustained attention.