South Korea Urged to Ditch Restrictive Crypto Regulations in Favor of US-Style Conduct-Based Approach

Joseph Shalom, CEO of Sharplink, a company focused on Ethereum treasury strategy, recently spoke at a digital asset dialogue in Seoul. He emphasized that South Korea should not follow the United States' approach to regulating crypto exchanges and stablecoins.

In the US, there is no federal-level cap on crypto exchange ownership, and while state laws govern virtual currency trading, they differ from state to state without a federal ceiling. Shalom also noted that the US has no specific rule requiring banks to hold a majority stake in stablecoin issuers or serve as guarantors of regulatory compliance.

Shalom drew a comparison with South Korea's proposed regulations, which include capping major shareholders of virtual currency exchanges at 15% to 20%. He argued that this approach is overly restrictive and would hinder innovation. Min Byung-duk, a Democratic Party lawmaker, concurred with Shalom's points and suggested that the bank majority-stake requirement is particularly problematic.

Shalom emphasized the importance of permitting won-denominated stablecoins, clear regulatory approval for tokenized equities, and structuring the tokenized asset market. He also advised that South Korea should adopt conduct-based regulation over entry barriers to avoid stifling innovation.