Bitcoin liquidity faces a squeeze due to a new South Korean law that effectively bars 99% of purchasers.

On the surface, South Korea has stood out as one of the most prominent crypto markets globally for several years. However, in reality, it has been rather limited.

For the average individual, trading on the major won exchanges was an option. Conversely, companies with cash reserves largely remained inactive.

This situation is finally beginning to evolve.

This week, Seoul Economic Daily reported that the Financial Services Commission presented a draft of “listed company virtual asset trading guidelines” to an industry-government task force on January 6. Regulators aim to release a finalized version in January or February.

The straightforward takeaway is clear. Listed companies and registered professional investor corporations will be permitted to reinvest corporate funds into crypto after a ban that has been in place since 2017.

The human aspect is more complex and intriguing.

If you manage treasury for a Korean firm, crypto has been something you could observe, investigate, and strategize around. However, you couldn’t effectively engage with it domestically without complicating banking relationships due to compliance issues.

Korea’s regulators did not create a singular law stating “no” for every corporate transaction. Instead, they relied on banks and the “real name” account restrictions.

The result was similar. Corporate funds remained on the sidelines.

Now, the guidelines indicate a controlled opening.

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What changes, and who gets to buy

The draft framework is centered around three significant constraints.

1. The buyers.
   The entities explicitly identified are listed companies and professional investor corporations. This means firms that fulfill registration criteria within Korea’s capital markets framework, rather than small businesses opening an exchange account impulsively. Approximately 3,500 corporates are being considered as potential qualifiers.
2. The size.
   The reported limit is an annual “deposit,” or investment cap, of up to 5% of a company’s equity capital. This is intentionally conservative. It prevents the initial wave from morphing into a national rush towards corporate Bitcoin treasury accumulation and provides regulators with a clear stop if volatility escalates.
3. The menu. Eligible assets will be restricted to coins among the top 20 by market capitalization, based on semiannual disclosures linked to Korea’s five major exchanges. The inclusion of dollar stablecoins such as USDT and USDC remains under discussion.

There are also market structure safeguards in place.

The report indicates that regulators want exchanges to implement standards regarding order types, including expectations for split execution and limits on orders that exceed specific price ranges. The objective is to mitigate sudden liquidity shocks once corporates enter the market.

If you’re seeking the moment when this transitions from “policy intent” to something actionable, the January 6 task force meeting is significant.

It indicates that the FSC is moving beyond the conceptual stage and into the “here are the controls, here is the scope” phase. The report also suggests an expectation that corporate trading may be permitted within the year.

Why this matters for Bitcoin liquidity, even with the limitations in place

Korean crypto trading has been heavily retail-focused for so long that the market has developed specific patterns. Expect surges of momentum, rapid alt rotations, and sudden sentiment shifts.

The reporting posits that corporate involvement could help temper the casino atmosphere by introducing risk management teams, committees, and longer time horizons.

Whether this optimism materializes or not, the impact on liquidity is tangible. Corporate trading patterns differ from those of individual traders.

A retail trader might sell due to boredom, fear, excitement, or over-leverage.

A treasury desk sells when a policy limit is reached, a quarter concludes, a board requests cash, or risk management determines the position is too large.

These factors manifest on charts in slower, more substantial ways. This tends to enhance order books for major assets like BTC and ETH.

There is a useful example in the Korean coverage.

It highlights Naver, reportedly having around 27 trillion won in equity capital, noting that a 5% allocation could be sufficient to purchase over 10,000 BTC at local reference prices.

This is not a forecast. It serves as a scale assessment and emphasizes why even a “small” cap can still lead to significant spot demand if large firms engage.

The converse is equally crucial.

If corporates are permitted to enter, they are also permitted to exit.

Korea is effectively constructing a two-way ramp for balance sheets, which could become a new supply source during market stress. The safeguards around asset eligibility and execution appear designed to prevent that supply from creating gaps in thin markets.

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The broader context, Korea is striving to modernize its market infrastructure

It is easy to interpret this as a singular crypto narrative. However, it fits better into a larger capital markets initiative.

South Korea has also announced intentions to open its foreign exchange market for 24-hour trading starting in July 2026. This initiative is connected to a broader effort to enhance market access and secure an MSCI developed-market upgrade, according to Reuters.

The government is essentially conveying its desire for global capital to flow in and out of won-denominated assets with reduced friction.

This macro objective aligns well with a policy aimed at making domestic crypto markets deeper and more prepared for institutional participation.

It also clarifies why the crypto opening comes with numerous restrictions.

Korea seeks increased participation, but on its own terms, within a compliance framework that regulators can uphold.

The FSC has been laying the groundwork for this strategy for some time.

In a February 2025 announcement regarding corporate participation, the commission mentioned establishing a task force with the FSS, the Korea Federation of Banks, and DAXA. It also outlined plans for internal control standards and guidelines for corporate entry, as per an FSC press release.

The January 2026 draft appears to be a continuation of that strategy, with the investor landscape transitioning from theory to operational rules.

What to monitor next, as the specifics will determine the market impact

If you’re interested in BTC liquidity, this story is less about the headline and more about the final details.

Four aspects will indicate whether this evolves into a steady demand or remains a cautious pilot that markets quickly overlook.

1. Which corporates are deemed eligible, and how stringent the “professional investor” criteria are in practice. If the list skews towards sophisticated treasury management, flows should be more stable. If it widens rapidly, anticipate more erratic behavior.
2. How the top-20 asset universe is calculated and enforced. The reporting connects it to semiannual market capitalization disclosures across the five major exchanges, and the operational specifics will be crucial, especially in fast-paced markets where rankings fluctuate.
3. Stablecoin policies. If USD stablecoins are excluded, the market remains more domestically confined, and corporate participation will be more KRW-centric. If they are included, it expands the ways corporates can manage liquidity and settlement, which typically increases trading volume and narrows spreads.
4. Execution guidelines and banking frameworks. The report highlights safeguards such as split trading and controls on out-of-range orders, and the banking infrastructure will determine whether the experience feels seamless or bureaucratic.

Korea is not suddenly transforming every chaebol into a Bitcoin giant.

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It is undertaking something more reflective of Korean priorities. It is establishing a framework, imposing limits, restricting what can be purchased, and tightening the venue’s regulations concurrently.

For Bitcoin, the trajectory still holds significance.

Corporate balance sheets embody the type of spot flow that can alter liquidity in ways that retail enthusiasm typically cannot. Korea’s market is substantial enough that even a carefully moderated opening can influence global BTC microstructure, particularly during Asian trading hours.

The prohibition kept corporate Korea on the sidelines for nearly a decade.

The guidelines currently being finalized indicate that remaining on the sidelines is no longer the plan. The next question is how wide the door will actually open when the FSC releases the final document.

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