South Korea halts ‘all work’ on crypto regulations amidst martial law aftermath

The South Korean National Assembly reportedly decided to put all discussions regarding crypto-related regulations on hold, following the aftermath of martial law and impeachment plans for the current president.

According to a Chosun report, a South Korean National Assembly official spoke out about the fate of the country’s crypto regulations that are still in the works. The report indicated that all crypto-related policies “have been buried under the impeachment issue, making it impossible to expect a vote.”

The unnamed official stated that the public should expect “an indefinite postponement” for bills related to virtual assets at least until “the impeachment situation is over.” The report predicted that discussions regarding all crypto-related regulations will resume in the first half of 2025.

“Since martial law has taken all the attention of the National Assembly, it is difficult to say but we should deal with this first, even though there are many bills related to virtual assets,” said the official.

The bills in question include South Korea’s initial coin offering ban, the issuance of real-name accounts for crypto trading, the decision to give local companies permission to add cryptocurrencies to their balance sheets, Bitcoin (BTC) spot ETF approval, and a legislation on securities token offering.

One bill that barely escaped the martial law aftermath is the proposal to delay the crypto tax law to 2027. The bill was debated over on Dec. 4 and received a majority vote in the National Assembly on Dec. 10, the last day of regular sessions before the council went into “full impeachment mode.”

If the National Assembly had not agreed on the bill by Dec. 10, the crypto tax law would have come into effect on Jan. 1, 2025.

In addition, the South Korean Financial Services Commission is taking a similar approach. The FSC had recently finalized the guidelines needed for corporate accounts based on advice from the Virtual Asset Committee and is set to be implemented within this month.

However, after the chaos fueled by the martial law, financial authorities have decided to push back on virtual assets and prioritize traditional financial markets, such as stocks, bonds, short-term funds, and foreign currency funds.

The crypto industry in South Korea have long pressed for more regulations that accommodate crypto trading for individuals and corporations, criticizing the nation’s lack of clear guidelines and protection.

With the issue of crypto laws being set aside indefinitely by the government, South Korea risks falling behind other countries like the U.S and Hong Kong that are accelerating their crypto regulation frameworks. As a result, the report indicated a growing concern that the martial law situation could drive domestic crypto firms and investors to move overseas.