In early 2025, South Korea's cryptocurrency market dealt with regulatory challenges following political upheaval due to a failed coup attempt by ex-President Yoon Suk Yeol. The government postponed a 20% capital gains tax, initially set for January, for two more years amid economic instability and fears of investor flight. Additionally, authorities issued warnings about North Korean cyber threats targeting crypto firms. The Financial Services Commission (FSC) considered allowing corporations to access trading accounts while tightening regulations, including protections against market manipulation. Significant developments included the indictment of a trader under the new Virtual Asset User Protection Act and the creation of a dedicated Virtual Asset Crime Joint Investigation Division. As the quarter progressed, the FSC reviewed legal avenues for Bitcoin spot ETFs and began blocking unregistered foreign exchanges. By March, the number of crypto account holders in South Korea surged, despite a drop in trading volumes, as tighter regulations transformed the landscape. The upcoming presidential election is set to further influence the industry's future as candidates address crypto policies and regulations.

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