South Korea's new president Lee Jae-myung promotes reform of encryption asset policies

On June 4th, the South Korean Election Commission announced the vote count results of the 21st presidential election, with Lee Jae-myung elected as the new president with a vote rate of 49.42%. It is noteworthy that encryption currency policy became a hot topic in this election for the first time.

Lee Jae-myung stated in his policy commitments that the goal is to "make South Korea a digital asset center" to lay the foundation for cultivating the virtual asset industry. He demonstrated a positive attitude towards encryption assets as early as his campaign in 2022, and raised campaign funds by issuing NFTs, becoming the world's first presidential candidate to adopt this method.

Lee Jae-myung promised to actively support the establishment of the digital asset ecosystem, including creative digital asset issuance, secure transactions and storage, indirect investments, and risk diversification through insurance. He also stated that he would consider allowing Initial Coin Offerings (ICOs) after taking sufficient protective measures to safeguard investors and prevent market chaos.

In this election, Lee Jae-myung further expanded his virtual asset policy proposals:

1. Promote Spot ETFs and Stablecoins: Lee Jae-myung promised to institutionalize the virtual asset spot ETF system and build an integrated regulatory framework. He also supports the issuance of a Korean won-pegged stablecoin to reduce the capital outflow issues caused by foreign currency stablecoins.

2. Allow national pension funds and government agencies to invest in encryption assets: Lee Jae-myung supports expanding public funds' allocation to encryption assets, proposing to allow national pension funds and other government agencies to invest in cryptocurrencies after meeting stability standards.

3. Relax cooperation between exchanges and banks: The team led by Lee Jae-myung emphasizes accelerating legislation into the second phase, further improving the regulation of exchanges under the existing regulatory framework, implying a tendency to relax exchange regulations and enhance market competitiveness.

4. Reduce encryption taxes: The Democratic Party proposed a gradual implementation of a tax on cryptocurrency transactions, but significantly increasing the deductible tax exemption from the current 2.5 million won to 50 million won, in order to alleviate the tax burden on ordinary investors, especially young people.

Lee Jae-myung's victory signifies a potential major shift in South Korea's policy direction regarding encryption assets. From "embracing regulation" to "nurturing the industry", and from institutional construction to aligning with the capital market, his "new encryption policy" has begun to take shape. Against the backdrop of multiple countries globally strengthening compliance regulation for cryptocurrency, whether South Korea can achieve its goal of becoming a "digital asset center" through this round of policy changes is worth the market's continued attention.