South Korea, a thriving crypto market, has chosen a president, Lee Jae-myung, who will push for a Korean won stablecoin and a crypto ETF.

As a core member of the Democratic Party, Lee Jae-myung narrowly lost in the 2022 presidential election to Yoon Suk-yeol. At that time, he made cryptocurrency policy a key political platform, attempting to attract support from young people and retail investors. However, two consecutive election defeats once labeled him as the "eternal candidate."

Until that day. In December 2024, a sudden change occurred in the South Korean political landscape. The incumbent president, Yoon Suk-yeol, was swiftly impeached due to attempting to declare martial law, causing a constitutional crisis under the dual pressure of public opinion and the National Assembly. This crisis not only left the presidential seat vacant two years early but also disrupted the existing power balance, unexpectedly creating an opportunity for Lee Jae-myung, this persistent political figure.

However, as the power structure collapsed and the National Assembly fell into turmoil, Lee Jae-myung quickly seized the opportunity. He summoned lawmakers to the National Assembly hall, initiated a live broadcast, and, with the support of the people, breached into the National Assembly.

From that day on, Lee Jae-myung became the more suitable presidential candidate in the minds of the South Korean people. "I must make as many citizens as possible understand this situation as soon as possible," he appealed to the public to witness the National Assembly overturning martial law through the live broadcast.

Finally, in the presidential by-election announced last night, Lee Jae-myung led with a 49.2% vote share over his opponent Kim Moon-soo (36.8%), successfully elected as the 21st president of South Korea. For his supporters, this was a "win at all costs" victory, a redemption battle after three attempts.

For the South Korean crypto industry, Lee Jae-myung's victory may have a more profound significance: he is not only a winner in politics but also one of the staunchest advocates for crypto policies. His election marks an imminent fundamental institutional shift in South Korea's digital asset regulation.

Lee Jae-myung's Commitment to South Korean Crypto

Even before taking office, Lee Jae-myung had put forward a series of clear digital asset policy proposals during his election campaign.

He positioned virtual assets as a key part of the nation's financial reform and, for the first time, included them in the presidential-level commitment system. His goal is to reshape the legitimacy and security of the crypto market through top-level institutional design.

Lee Jae-myung's commitment to the "South Korean crypto industry" includes:

1. Promote the legalization of virtual asset spot ETFs;

2. Guide the massive Korean National Pension Fund (approximately $884 billion) to allocate to crypto assets;

3. Build a stablecoin system anchored to the Korean Won, using it as a strategic tool to prevent capital outflow and strengthen domestic financial sovereignty.

Among them, the most eye-catching is his strong advocacy for a Korean Won stablecoin. In a YouTube livestream, Lee Jae-myung publicly stated: "To prevent the outflow of national wealth, it is necessary to establish a stablecoin market based on the Korean Won." This declaration not only reflects his keen insight into the international competitive landscape of digital assets but also directly addresses the regulator's concerns about the increasing dominance of USD-pegged stablecoins like Tether (USDT) and USD Coin (USDC) in Korean domestic trading.

According to Bank of Korea data, in just the first quarter of 2025, the trading volume of USD-pegged stablecoins has reached as high as 57 trillion Korean Won, accounting for over half of the total stablecoin trading volume.

To achieve these goals, Lee Jae-myung plans to "reorganize the market under government leadership, reduce fees, and establish a comprehensive regulatory system," and promote the establishment of a dedicated "Digital Asset Regulatory Agency." The core idea is to provide a safer trading environment for retail investors through official leadership, driving cryptocurrency from a "speculative tool" to an "asset allocation option."

This is not Lee Jae-myung's first time speaking out in the digital finance sector. As early as 2021, he advocated for postponing the implementation of the virtual asset income tax scheduled for 2022, emphasizing "regulation first, taxation second." He also proposed a significant increase in the tax threshold from 2.5 million Korean Won to 50 million Korean Won, equivalent to stock investment, and allowed loss deductions to alleviate the burden on retail investors and enhance policy fairness.

Today, this policy roadmap centered on ETFs, stablecoins, and regulatory frameworks is no longer just an election slogan but is gradually being transformed into specific proposals under Lee Jae-myung's governance. For the Korean crypto industry, this may signify a new development stage — moving from the periphery of the financial system towards institutional core.

Once Luna Plummets, Ten Years Fear Calculation Stability?

However, Lee Jae-myung's strong push for a Korean Won stablecoin plan is not without controversy.

Soon after he proposed building a domestic Korean Won stablecoin market, the New Reform Party presidential candidate Lee Jun-seok launched a fierce critique on social media. He wrote: "Candidate Lee Jae-myung's economic views are always dangerous and full of experimentation. He recklessly throws out untested ideas, evidently lacks an understanding of the market, and merely repeats hollow slogans."

Lee Jun-sik specifically mentioned the Terra/Luna event that once shocked the world—an incident involving a so-called "stablecoin" project claiming to be pegged to the Korean won but relying on an algorithm to maintain its price. The project's collapse left hundreds of thousands of investors penniless, casting a dark shadow over the term "stablecoin" in the South Korean public's mind. It also became a key point of attack for the conservative camp criticizing Lee In-myeong's policies. Lee Jun-sik accused Lee In-myeong's proposal of "repeating the mistakes of the past" and of "using national credit to endorse a fictional structure."

In response, the Democratic Party camp swiftly counterattacked. Former Congressman Kim Byeong-uk publicly stated, "To entirely reject the Korean won stablecoin based solely on the Terra and Luna event is evidently going against the international regulatory trend." He explained, "Major regulatory agencies in the United States, Europe, Japan, and others have explicitly excluded 'algorithmic stablecoins' (such as Terra/Luna) from the category of compliant stablecoins, considering their high volatility and unsuitability as a reliable store of value."

Kim Byeong-uk emphasized that a true compliant stablecoin should adopt a "1:1 full reserve" model, meaning it should be fully backed by secure assets such as cash or short-term government bonds, with real-time disclosure of reserve status and an obligation for immediate redemption. He pointed out that mainstream stablecoins like Tether (USDT) fall into this category. In contrast, Lee Jun-sik's blanket denial of all stablecoins revealed his misunderstanding of the global cryptocurrency regulatory framework.

Another Democratic Party lawmaker, Min Byeong-deok, responded with more irony, stating, "If we were to eliminate the entire printing industry just because one copy machine broke down, that would be ridiculous." He likened stablecoins to a stage in the development of financial technology, emphasizing that regulation through institutionalization should be used to control their development, rather than a complete ban due to individual cases of failure.

The South Korean Crypto Ecosystem Enters a New Phase of "Nationalization"

Against the backdrop of Lee In-myeong's victory, the South Korean crypto industry is quietly entering a policy-driven new phase.

Unlike the past era of grassroots growth and platform individualism, the current market resembles more of a game reshuffling around "institutional dividends."

South Korea has always been one of the most active cryptocurrency markets globally. According to the Korea Financial Intelligence Unit (FIU), by the end of 2024, the number of cryptocurrency investors who have completed real-name authentication has reached 9.7 million, a 25% year-on-year increase. Particularly noteworthy is the significant growth of investors in the 30 to 50 age group. Among the high-net-worth group holding crypto assets worth over 100 million Korean won, the 40 and older age group accounts for approximately 78%. This structural shift indicates that cryptocurrency assets are gradually moving away from the stereotype of being a "speculative tool for young people" and are becoming part of the asset allocation for the middle class and above.

Simultaneously, in 2025, the South Korean cryptocurrency trading market experienced explosive growth, with the total transaction value exceeding 100 trillion Korean won, even surpassing the trading volume of the domestic stock market at one point. This growth was driven by both the expectation of loose domestic policies and global political and economic conditions. Especially against the backdrop of Donald Trump's reelection as U.S. President triggering a flight to safety for dollar-denominated assets, a large number of local Korean investors poured into the virtual asset market denominated in Korean won, creating a regional capital inflow surge.

In the face of the active market, regulations are also gradually catching up. The government has announced a two-year postponement of the virtual asset transfer income tax originally scheduled to be implemented in 2025, citing reasons such as "immature technology implementation" and "inadequate investor protection systems." This move effectively calmed the market sentiment and also bought time for the new regulatory framework led by Lee Jae-myung.

However, delaying taxation does not mean relaxation of regulation. The Virtual Asset User Protection Act (VAUPA) enacted in 2024 has officially taken effect, imposing stricter compliance requirements on trading platforms, including asset custody mechanisms, insider trading prevention, and user asset segregation management, among other core elements. The government's intention is clear: through a more robust institutional design, prevent a repeat of trust crises like Terra/Luna, and lay the foundation for the "normalization" of the cryptocurrency market.

This series of policy signals conveys a clear message: the South Korean government is committed to integrating cryptocurrency assets into the national financial governance system, driving the market's transition from laissez-faire towards institutional embedding in a "nationalized" manner. This is precisely the vision outlined by Lee Jae-myung—an innovative digital asset market guided by the government, secured by rules, and driven by innovation.

In the future of South Korea, cryptocurrency policies may not be without challenges. Controversies surrounding stablecoins, the implementation of taxation, international regulatory coordination—these issues still exist. But one thing is certain, during Lee Jae-myung's tenure, cryptocurrency is no longer a taboo gray area but has been incorporated into the national strategy promised by the President. South Korea's cryptocurrency industry has finally welcomed an institutionalized starting point.

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