South Korea stands at a familiar crossroads that many advanced economies have faced and few have navigated gracefully: whether to preserve comfort in the short run or credibility in the long run. The choice is not ideological. It is physiological. A nation cannot reach a truly advanced economic status on the back of a financial system that rewards opacity, subsidizes stagnation, and repeatedly invites speculation to masquerade as growth.
For too long, Korean finance has lived with an uneasy compromise between market logic and political convenience. In election seasons, liquidity is loosened. In downturns, restructuring is postponed. Under the banner of “stability,” reforms are delayed until they become crises. And under the rhetoric of “support,” policy too often becomes tailored to specific constituencies—by age, by sector, by region—until the market’s signals are dulled and capital is diverted away from productivity and toward influence.
The cost of that compromise is now visible in the places where trust should be strongest: the equity market and the fast-expanding crypto-asset arena. They are different worlds in form, but they share a common pathology: weak discipline at the point of entry and an even weaker willingness to enforce exit. Markets can survive exuberance; they cannot survive the loss of standards.
Start with the equity market, particularly the growth-oriented tier that was built to finance innovation. Listing was never meant to be a trophy. It is a covenant. A listed company is granted privileged access to public capital on the promise of minimum governance, transparency, and viability. When that covenant is treated as optional—when firms can remain listed for years while failing basic tests of sustainability—an exchange stops being a price-discovery mechanism and becomes a warehouse of disappointments.
This is not merely a question of index performance or investor sentiment. It is a question of national resource allocation. When weak firms linger indefinitely, they do more than drag valuations. They absorb the oxygen that should nourish better enterprises: skilled labor, credit, managerial attention, and scarce institutional trust. “Zombie companies” do not die quietly. They distort the entire ecosystem around them, discouraging investment in healthier competitors and turning productivity growth into a casualty of regulatory hesitation.
The most consequential reforms in financial history are often the least glamorous: sharper delisting rules, faster enforcement timelines, and a regulatory philosophy that treats exit not as a tragedy but as a necessary function of a living market. In the United States, the harshness of the public markets is frequently criticized. Yet the logic is clear.
There is a widely understood expectation that a firm that cannot meet minimum standards—whether in governance, disclosure, or basic market viability—will be forced out within a defined period. This is not cruelty for its own sake. It is the price of maintaining an exchange whose name still signals credibility.
Europe, too, has learned this lesson, sometimes painfully. Mature exchanges and regulators emphasize disclosure discipline and internal controls not because they distrust business, but because they understand what markets become when trust is optional: they become casinos with better typography. Over time, investors do not merely discount a handful of questionable firms. They discount the entire jurisdiction. And the “country discount” becomes a structural tax on every company, including the best ones.
Korea’s chronic undervaluation has many causes—corporate governance traditions, capital allocation habits, geopolitical risk, and more. But one cause is particularly actionable: the perception that rules are negotiable and enforcement is slow. When delisting takes years, when lawsuits and reconsiderations become routine, when the market treats failure as a prolonged administrative process rather than a definitive outcome, the signal to investors is unmistakable: standards are soft. That softness does not protect investors. It exposes them.
A more rigorous exit regime is therefore not an anti-market intervention. It is pro-market maintenance. But it must be paired with a principle that separates necessary discipline from avoidable harm: predictability. Delisting should not be a sudden lightning strike; it should be the final step in an announced procedure. That means stronger early warnings, more transparent escalation, better disclosure during distress, and a regulatory architecture that makes it impossible for the average investor to claim—credibly—that they were never told.
This is where policy must show both firmness and fairness. The goal is not to punish risk; it is to punish deception, negligence, and chronic noncompliance. A market that protects people from all losses is not a market—it is a political program. But a market that allows avoidable losses through preventable opacity is not a market either. It is a breach of public duty.
If equity-market reform is about restoring the meaning of “listed,” the crypto challenge is about restoring the meaning of “regulated.” Korea’s crypto-asset space has matured beyond the stage where it can be dismissed as a fringe playground. It is now a meaningful segment of household speculation, tech ambition, and financial experimentation. That makes its shortcomings more dangerous, not less.
Recent controversies surrounding major platforms—the foggy lines of ownership, the questions around internal controls, and the broader problem of opaque practices—are not “industry growing pains.” They are stress tests of institutional seriousness. In any system where vast sums move at high speed, the core question is simple: do customers know where their assets are, how they are handled, and what happens if the platform fails?
In many jurisdictions, regulators have moved—sometimes unevenly—toward clearer answers. In the United States, the debate often turns on whether certain crypto instruments should be treated as securities, and therefore subject to the disclosure and conduct standards that securities law demands. In Europe, the introduction of comprehensive frameworks has aimed to do what every credible financial regime must do: impose rules on issuance, custody, market conduct, and consumer protection so that innovation can occur without turning public trust into collateral damage.
Korea’s task is not to copy any single model. It is to embrace a standard that all credible models share: transparency in custody, separation of customer assets, robust controls against insider trading and market manipulation, and disclosure regimes that do not collapse under the pressure of hype. A platform that cannot prove—continuously—that it is handling customer assets responsibly should not be treated as a national champion. It should be treated as a risk to the public.
This is the moment where “mercy” becomes a sophisticated form of irresponsibility. There is a Korean phrase that captures the moral weight of necessary harshness: cutting off a favored general for the survival of the army. In finance, the principle is the same. If a dominant exchange or major listed firm is found to have serious deficiencies, the question is not whether enforcement will cause disruption. It will. The question is whether failing to enforce will guarantee a larger disruption later—one that arrives with deeper losses, broader contagion, and a more lasting collapse of trust.
Trust, once broken, is not repaired by slogans. It is repaired by rules that bite.
The deeper problem in Korea’s financial history is not a lack of clever policy instruments. It is the habit of treating finance as an extension of political timing. The impulse is understandable: loosen conditions before elections, postpone restructuring when headlines are uncomfortable, rescue favored sectors with cheap funding, and reassure households that tomorrow will be easier if the state absorbs today’s pain.
But the world has changed. In a global capital market, credibility travels faster than political promises. If a country’s rules appear elastic, international investors respond with the only language markets trust: higher risk premiums, lower valuations, reduced participation, and a quiet migration of capital to places with clearer standards. Over time, even domestic investors internalize the message and behave accordingly—favoring short-term speculation over long-term investment because the system itself encourages it.
What, then, should be done?
First, Korea should treat equity-market exit as a pillar of modernization, not an embarrassment. Delisting standards should be clearer, stricter, and, most importantly, faster. A market that cannot remove chronic underperformers in a timely fashion is a market that cannot credibly price anything else.
Second, enforcement must be depoliticized. Regulatory agencies should be insulated—by law and by culture—from the temptation to delay discipline for the sake of short-term calm. The calm is illusory. It merely transfers the shock to the future, at a higher cost.
Third, crypto markets must be normalized through regulation that focuses on fundamentals: custody, transparency, market conduct, and governance. Innovation deserves room to grow, but it must grow inside a framework that protects the public from the most predictable forms of abuse. The state’s job is not to guarantee profit. It is to guarantee integrity.
Fourth, investor protection should be strengthened not by cushioning losses after the fact, but by reducing informational asymmetry before the fact. That means better disclosure standards, stronger auditing and oversight, and real consequences for misrepresentation.
Finally, Korean policymakers should embrace a simple global truth: genuine “value-up” is not built on public relations campaigns or one-off shareholder return measures. It is built on ecosystem integrity—where weak firms exit, strong firms attract capital, and the market’s signals are respected rather than managed.
There is no way to reform finance without discomfort. Every serious modern economy has learned this. The question is not whether there will be pain. The question is whether the pain is concentrated and purposeful—like surgery—or prolonged and degenerative, like disease.
Korea’s economic ambition is not in doubt. Its industrial capacity, technological talent, and entrepreneurial energy remain formidable. But ambition without financial integrity is like speed without steering. In the end, it does not produce greatness. It produces wreckage.
Finance is the bloodstream of the economy. Korea can choose to keep the system warm with compromise and delay, and watch the discount deepen. Or it can choose to restore discipline—strict standards, predictable enforcement, and transparent markets—and earn, over time, the one asset no nation can fake: trust.
In finance, trust is not a sentiment. It is a structure. And structures, unlike slogans, can carry the weight of a nation’s future.
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