South Korea's new president Lee Jae-myung promotes encryption-friendly policies, attracting market follow.

The South Korean Election Commission announced on June 4 that the vote counting for the 21st presidential election has been completely finished. The results show that Lee Jae-myung has been elected as the new president with a voter turnout of 49.42%, receiving 17,287,513 votes, setting a record for previous elections. Lee Jae-myung immediately began to assume office and moved the presidential office back to the Blue House.

It is worth noting that in this South Korean presidential election, cryptocurrency policy has become the focus issue for the candidates for the first time. To win the votes of young people and the middle class, the main candidates have proposed proactive and progressive commitments to encryption asset policies. Lee Jae-myung has listed virtual assets as an important component of "fair economy" in his policy agenda, promising to aim to "make South Korea a center for digital assets" after taking office, laying the foundation for cultivating the virtual asset industry.

Lee Jae-myung's Positive Attitude Towards Encryption Assets

Back in 2022, during his presidential campaign, Lee Jae-myung demonstrated a supportive attitude towards encryption assets, which was seen as an attempt to attract young voters primarily interested in cryptocurrencies. He also innovatively raised campaign funds by issuing NFTs, becoming the first presidential candidate in the world to adopt this method.

Lee Jae-myung once stated: "Even if we turn a blind eye, the existing market will not disappear. If we cannot avoid it, we must seize the opportunity." He promised to actively support the establishment of the digital asset ecosystem, including innovative digital asset issuance, secure trading and storage, indirect investment, and diversifying investment risks through insurance, among other aspects.

In addition, Lee Jae-myung also proposed considering the allowance of Initial Coin Offerings (ICOs) after taking sufficient measures to protect investors and prevent market disorder. He believes that the ICO ban is not a law, but rather a unilateral measure taken by the Ministry of Justice, and that it may be possible to achieve this goal before enacting licensing laws if a stable system can be established.

Lee Jae-myung also publicly apologized for the encryption policies of the past Democratic Party government, believing that excluding virtual assets from the financial system was a wrong decision that hindered the normal development of the market. He also announced that he would review allowing the issuance of security tokens (STO) based on physical assets and raise the tax exemption threshold for cryptocurrency investment returns.

Promote the Development of Spot ETFs and Stablecoins

Lee Jae-myung promised to support the asset appreciation of young people, clearly stating the intention to institutionalize the spot ETF for virtual assets and to build an integrated regulatory system. The Democratic Party of Korea also established a Digital Asset Committee dedicated to formulating cryptocurrency policies and promoting industry development. The committee's primary tasks include drafting the "Basic Law on Digital Assets" to establish a legal framework for encryption assets and stablecoins, and plans to explore comprehensive virtual asset-related institutional arrangements covering stablecoins, NFTs, security token offerings (STOs), and more in the future.

Lee Jae-myung expressed support for issuing a won-pegged stablecoin, advocating for the establishment of a stablecoin market denominated in won to reduce the capital outflow issues caused by foreign currency stablecoins. He believes that "a stablecoin linked to the won should be issued to prevent the outflow of national wealth," and compared the failure to accelerate entry into the stablecoin market to the "isolation policy of the late Joseon Dynasty."

Expand the Scope of Institutional Investment

Lee Jae-myung supports the expansion of public funds allocated to encryption assets, proposing to allow national pension funds and other government agencies to invest in cryptocurrencies after meeting stability standards. The Digital Asset Committee under his campaign emphasized that this is not speculative investment, but a diversified investment strategy that complies with international optimization models and is controlled and scientific.

The Digital Asset Committee plans to establish a system that enables the National Pension Fund to go beyond its current indirect investments in virtual assets and make direct investments. After incorporating virtual assets into the system to ensure stability, the National Pension Fund will continue to improve the legislative and regulatory framework, establishing an investment process that complies with domestic and international regulations.

Relax Exchange Regulation and Tax Policies

Lee Jae-myung's regulation of encryption exchanges focuses on introducing a government-led rectification mechanism, proposing the establishment of a comprehensive monitoring system to centrally regulate major trading platforms, and guiding the government to reduce market trading costs.

In terms of taxation, the Democratic Party, to which Lee Jae-myung belongs, proposed gradually implementing a taxation on encryption asset transactions, but significantly increasing the deductible tax-free amount. The Democratic Party plans to impose a virtual asset income tax as scheduled in 2024, but will raise the deduction limit for individual trading profits from the current 2.5 million won to 50 million won, in order to alleviate the tax burden on ordinary investors, especially young people.

Conclusion

Lee Jae-myung's election signifies a potential major shift in South Korea's policy direction regarding encryption assets. From "embracing regulation" to "cultivating the industry," and from institutional development to aligning with the capital market, his "new encryption policy" is beginning to take shape. In the context of various countries around the world strengthening compliance regulation for cryptocurrency, whether South Korea can achieve the goal of becoming a "digital asset center" through this round of policy changes is worth the market's continued follow.