Exactly two weeks away from South Korea’s presidential election, Democratic Party candidate Lee Jae-myung is appealing to the country’s youth with a promise to legalize spot cryptocurrency exchange-traded funds (ETFs) and create a won-based stablecoin. According to Lee, the crypto economy could create wealth-building opportunities for younger generations. The East Asian country is one of the world’s most active crypto investor populations, with an estimated 15 million residents having exposure to digital assets. Lee’s campaign is targeting this economically anxious voting bloc, many of whom are hoping to accumulate wealth in digital currencies. According to local news outlet the Korea Herald, both Lee Jae-myung of the Democratic Party of Korea and his rival Kim Moon-soo of the People Power Party made pro-crypto digital asset policy pledges ahead of the upcoming presidential election. South Korea political candidate pushes for crypto reforms Lee’s camp is calling for law changes that legalize spot crypto ETFs, to allow assets like Bitcoin to be traded on South Korean stock exchanges. The presidential aspirant said he is committed to building an integrated digital asset monitoring system and reducing transaction fees to make it safe for investors. He reiterated that these financial products could help hedge against crypto’s volatility when added to a diversified investment portfolio, much different from risk profiles of stocks and bonds. Financial authorities are looking at some amendments to the Capital Markets Act that would classify cryptos as valid underlying assets for ETFs on Korean exchanges . Advocates believe this could boost the number of crypto holders in the country. Notably, Lee has proposed letting large institutional players such as the National Pension Fund invest in digital assets once price stability thresholds are met. Beyond crypto ETFs, Lee’s vision for South Korea’s economy includes the development of a domestic stablecoin backed by the Korean won. He argues that creating a regulated stablecoin market could help the government preserve national wealth and reduce its reliance on foreign digital currencies. In a policy roundtable held last week with several economic content creators, the democratic party candidate warned of capital leakage through the current dependence on US dollar-backed stablecoins such as USDT and USDC. “ We need to establish a won-backed stablecoin market to prevent national wealth from leaking overseas ,” Lee explained. He proposed using the won as an alternative to foreign stablecoins, which could also support the domestic financial system. South Korea presently prohibits the issuance of stablecoins tied to the won, leaving Korean exchanges dependent on foreign-issued assets. Data from Q1 2025 showed 56.8 trillion won (approximately $40.8 billion) in outflows from Korean crypto exchanges, nearly half of which were linked to dollar-based stablecoins. Authorities cautiously optimistic about crypto ETFs Per a public statement released on Monday, Lee Keun-ju, president of the Korea Fintech Industry Association, said Korean markets need ETFs to link the digital economy with existing capital markets. “ A Bitcoin spot ETF is not simply a product, ” Lee Keun-ju stated. “ It can be the gateway to broadening the connection between the digital asset ecosystem and the capital market .” Still, he asserted that legal and infrastructural upgrades would be necessary to support these policy goals. The country’s financial system will need time to adapt to the regulatory and technological demands of crypto ETF integration. The Democratic Party is preparing to introduce the Digital Asset Basic Act this week. This legislation will serve as the foundation for legal oversight of the sector, detailing regulations for the issuance, circulation, and exchange of digital assets in South Korea. If passed, the bill would also formally recognize digital assets as part of Korea’s financial and legal infrastructure. However, plans of creating a national Bitcoin reserve faltered after the Bank of Korea ruled out proposals in mid-March, citing the crypto’s volatile nature. Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now
