Veteran capital in crypto is shaping South Korea’s elections

South Korea’s snap presidential election, spurred by the impeachment of former President Yoon Suk-yeol, has thrust cryptocurrency to the forefront of the political agenda. The June 3rd vote pits three leading candidates against each other, all vying for support from a rapidly expanding base of crypto investors spanning generations. This marks a significant shift from the 2022 election, where crypto policies primarily targeted younger voters.

The candidates’ pro-crypto platforms demonstrate a recognition of the growing economic and social influence of digital assets. Key proposals include the legalization of Bitcoin spot ETFs and the easing of restrictive banking regulations currently limiting fiat-to-crypto trading to only five platforms. This restrictive framework excludes corporate participation and hinders broader market growth.

Lee Jae-myung, from the Democratic Party, and Kim Moon-soo, representing the People Power Party, both advocate for relaxing banking rules. Lee further proposes a won-pegged stablecoin to reduce dependence on foreign-issued tokens. This initiative, however, has drawn criticism from Lee Jun-seok of the Reform Party, who points to the TerraKRW collapse as a cautionary tale, highlighting the lack of proposed safeguards against market risks. A heated debate between Lee Jae-myung and Lee Jun-seok ensued, focusing on the safety and viability of centralized, fiat-backed stablecoins.

Lee Jun-seok, emphasizing the importance of South Korea’s gaming industry, pledges support for the blockchain-based play-to-earn (P2E) sector, currently banned under local regulations. He sees this as crucial for attracting global market share and fostering innovation. The recent surge in interest surrounding a new P2E game from Nexon underscores the potential of this sector.

The growing number of older investors, with substantial crypto holdings, adds further momentum to the demand for regulated investment vehicles like ETFs. The approval of Bitcoin ETFs, already a key campaign promise for Lee Jae-myung and Kim, aligns with global trends and the increasing institutional interest in South Korea’s retail-driven crypto market. While the Capital Markets Act poses a legal hurdle, the Financial Services Commission is actively exploring pathways to enable Bitcoin ETFs.

Current polls indicate Lee Jae-myung holds a significant lead, but the election outcome remains uncertain. The election’s focus on cryptocurrency reflects its evolution from a niche interest to a major economic and social issue impacting all generations of South Korean society.