The Time Has Come for a Shift Toward Innovation
Regulatory Reform and Policy Support Need Serious Consideration
In 2017, as South Korea's virtual asset market overheated rapidly, the government prepared strong regulatory measures. Accordingly, virtual asset transactions by financial companies and corporations were prohibited, and the issuance of real-name accounts for corporations was virtually suspended, causing the domestic blockchain industry to contract. However, in 2024, with the implementation of the Virtual Asset User Protection Act, and amid a global market trend toward institutionalizing virtual assets centered on corporations, South Korea is also seeking to transition away from regulation-centered policy toward gradually allowing corporate participation.
In November 2024, the first Virtual Asset Committee reviewed allowing the opening of real-name accounts for law enforcement agencies and non-profit corporations, and from the second quarter of 2025, exchanges, non-profit corporations, and law enforcement agencies are expected to be allowed to open corporate accounts for cash conversion purposes, with listed corporations and large investment corporations able to trade virtual assets in the second half, with anti-money laundering standards and disclosure obligations also significantly strengthened. Full permission for general corporations to trade virtual assets is expected to be considered long-term after foreign exchange and tax-related institutional arrangements are made.
In February 2025, the government officially announced a "Corporate Participation in the Virtual Asset Market Roadmap," with more systematic regulatory reform expected in the first half through preparation of guidelines by corporate type, and in the second half and beyond, strengthening of anti-money laundering and market monitoring measures. Now South Korea also needs to reflect the flow of the global virtual asset industry through the transition from regulation to innovation, and to achieve blockchain industry revitalization and financial innovation through corporate participation.
Digital Assets vs. Virtual Assets
The term "Virtual Assets" is officially used in South Korea's financial regulation, but in the United States, "Digital Assets" has established itself as the legal term. The two terms may look similar at first glance, but there are essential differences in their background of use and meaning.
U.S. digital asset-related legislation and financial regulatory agencies officially adopt the term "Digital Assets." The expression "digital assets" is consistently used in FIT21 (Financial Innovation and Technology for the 21st Century Act), regulatory documents of the SEC (U.S. Securities and Exchange Commission) and CFTC (U.S. Commodity Futures Trading Commission), the 2022 Biden administration presidential executive order, U.S. Congressional digital asset-related hearings and reports, and court judgments. This term has established itself as a concept encompassing not only simple cryptocurrency but also various blockchain-based financial products such as NFTs (non-fungible tokens), stablecoins, and digital securities.
In contrast, the term "Virtual Assets" is primarily used by international financial institutions (FATF, IMF, UN) for the purposes of anti-money laundering (AML) and financial crime prevention. FATF (Financial Action Task Force) adopted it as an official term in its 2019 guidelines on "Virtual Asset and Virtual Asset Service Providers (VASPs)," and the IMF (International Monetary Fund) and UN (United Nations) also use the term virtual assets in some documents. However, U.S. financial authorities and regulatory agencies do not officially use the term virtual assets.
The reasons why the United States chose "Digital Assets" over "Virtual Assets" can be summarized in three points. First, the word "virtual" can include all assets without physical substance, such as in-game items, metaverse goods, and e-commerce points, making the legal definition ambiguous. Second, in U.S. financial regulation, with the emergence of Digital Securities, Digital Bonds, and Tokenized Assets, "digital" is used as a more comprehensive concept than the expression "virtual." Third, "Digital Assets" can clearly define financial assets issued on a blockchain basis or existing in digital form, encompassing not only cryptocurrency but also various blockchain-based financial products.
Ultimately, the United States' adoption of the term "Digital Assets" can be said to be a choice to secure legal clarity and regulatory consistency within the financial system. Meanwhile, the term "Virtual Assets" has established itself as a concept related to the anti-money laundering policies of international financial institutions, and is used within the framework of financial regulation in some countries including South Korea. Understanding this difference has important implications for grasping each country's financial regulatory direction and forecasting the development of the digital asset market.
The U.S. Regulatory Innovation Points the Way for South Korea
In January 2025, with the inauguration of the Trump administration, an executive order was issued to concretize virtual asset policy, and with this as an opportunity, the United States is further accelerating the institutionalization of virtual assets. Such examples of U.S. regulatory innovation suggest that South Korea must clearly define its direction for how to reform the virtual asset market. The United States emphasizes that regulatory clarity enables digital asset innovation, taking a balanced approach that simultaneously considers market development and financial protection.
On May 22, 2024, the U.S. House of Representatives passed H.R. 4763, the "Financial Innovation and Technology for the 21st Century Act (FIT21)," taking a historic first step for the digital asset industry. FIT21 aims to establish a clear regulatory framework for the U.S. digital asset market, strengthen consumer protection, and promote technological innovation, and is a bill that supports the United States remaining a center of innovation in the global digital asset market.
This bill takes as its core task resolving regulatory uncertainty in the digital asset market, establishing strong protections to allow investors and users to trade safely, and maintaining U.S. financial leadership. FIT21 provides not merely regulatory strengthening, but a policy foundation that supports the United States positioning itself as a nation leading blockchain and digital financial technology.
Until now, U.S. digital asset regulation has been handled by two agencies — the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission) — but has faced criticism for inconsistent and complex application methods. Some policymakers argue that existing laws and regulatory frameworks are sufficient to adequately manage digital assets, while others have presented the view that clearer regulatory authority is needed. If FIT21 is finally enacted into law, the United States will have the first federal-level legal framework with a clear direction in digital asset regulation.
The main contents of the bill are as follows.
1. Distinguishing Regulatory Authority Between CFTC and SEC
FIT21 is designed as a structure that distinguishes the roles of CFTC and SEC to secure clarity in digital asset regulation. The CFTC handles regulatory authority over "Digital Commodities" and plays a role in supervising transactions in the spot market. Meanwhile, the SEC supervises "Digital Assets as part of an Investment Contract" and establishes procedures for allowing secondary market transactions of digital assets issued based on investment contracts. Through this distinction, market participants can more clearly understand which regulatory agency supervises the digital assets they trade.
2. Introduction of Strong Consumer Protection Measures
Also, FIT21 introduced strong information disclosure and fund protection measures to secure the credibility of the digital asset market and protect consumers. Digital asset developers have an obligation to disclose transparent information related to the operation, ownership, and structure of projects, and digital asset exchanges, brokers, and dealers must provide appropriate information to customers. Also, measures were established to strengthen the fund protection system that stores customer funds and company funds separately, and to prevent conflicts of interest by complying with registration and operational requirements. Through this, consumers will be able to trade digital assets in a safer environment, and strong protective devices preventing unfair practices in the market are expected to be established.
3. Protection of Digital Asset Projects and Market Activation
FIT21 not only establishes regulations but also plays a role in protecting digital asset projects and activating the market. Digital asset developers can have opportunities to secure new funding methods, and market participants can establish procedures to clearly confirm whether specific digital asset transactions will be subject to SEC or CFTC regulation. Through this, the goal is to create an environment in which technological innovation and investment opportunities can proceed smoothly, promoting the growth of the digital asset market.
4. Establishment of Clear Registration and Regulatory Frameworks
Clearly setting the regulatory boundaries between the SEC and CFTC to prevent overlapping regulations is also a key aspect of FIT21. By introducing a comprehensive registration system that allows digital asset service institutions (exchanges, brokers, etc.) to legitimately support customers, it focuses on increasing regulatory consistency and enabling market participants to operate under a clearer regulatory framework.
Implications of U.S. Regulatory Innovation: What Direction Should South Korea Take?
Patrick McHenry, Chairman of the House Financial Services Committee, announced that the FIT21 bill passed with bipartisan support, clearly emphasizing that the core of FIT21 is financial innovation based on regulatory clarity and consumer protection.
"FIT21 provides clear regulatory frameworks and strong consumer protection measures to allow the U.S. digital asset ecosystem to thrive. Also, this bill ensures that the United States can lead the future financial system and remain a center of technological innovation."
It is highly commendable that the United States is establishing a clear regulatory framework like FIT21 to lead blockchain technology and digital financial innovation. If finally enacted into law, it is expected to resolve uncertainty in the U.S. digital asset industry and create a safe investment environment. By reorganizing the existing ambiguous regulatory framework, companies and investors can operate in a more predictable environment, and furthermore it will play an important role in the United States maintaining solid leadership in the global digital asset market.
These changes are not merely regulatory reforms within the United States, but will also have a great impact on the international regulatory environment surrounding the virtual asset market. In particular, in a situation where many countries including South Korea are still experiencing difficulties in industry development due to regulatory uncertainty, the U.S. legal reforms provide important implications. As the United States is showing a direction of simultaneously achieving investor protection and market revitalization by establishing a clear regulatory framework, South Korea must also benchmark this and seek regulatory innovation in line with global trends.
The "Corporate Participation in the Virtual Asset Market Roadmap" to be announced in February 2025 is a positive signal in that South Korea is trying to keep pace with the global digital asset market through more systematic regulatory reform. However, questions regarding the full permission of corporate market participation, foreign exchange and tax reform, and strengthening of anti-money laundering standards still need to be resolved. The core task is not simply easing regulations, but as seen in the U.S. example, creating a clear and predictable regulatory environment.
For South Korea to not miss opportunities for innovation and growth in the virtual asset market, regulation must no longer be viewed solely as a "means of risk avoidance." As the global financial order accelerates digital transformation, South Korea must also introduce more flexible and practical policies based on the principle of regulatory clarity like the United States. The time has come for a shift from regulation to innovation, and we must consider regulatory reform and policy support together so that the virtual asset industry can establish itself as an important pillar of the financial market.
