The Financial Services Commission is reviewing licensing requirements and conduct rules for custody providers under the government’s planned second-phase digital asset legislation, Kim Sung-jin, director of the FSC’s Virtual Asset Division, said Thursday.
“There is little room for disagreement over classifying custody as a separate business,” Kim told a conference at the National Assembly in Seoul.
The regulator is examining several approaches to entry requirements and business conduct rules, he added.
Crypto custody services hold and manage digital assets and the private keys needed to access them, while separating client holdings from a provider’s own assets.
The FSC regards custody as an essential part of the financial infrastructure needed to protect customer assets and support transactions involving corporate and institutional investors.
The regulator is also considering how crypto custodians should be positioned alongside traditional trust businesses, given that both safeguard client assets but custodians primarily manage private keys rather than conventional property.
Kim said the commission was studying the European Union’s approach to assessing whether different regulatory systems provide functionally equivalent protections.
The FSC, however, appeared cautious about requiring crypto exchanges to spin off their custody operations into separate companies.
Few overseas jurisdictions have forcibly separated the two functions, Kim said, suggesting tighter conduct rules could better balance customer convenience against potential conflicts of interest within exchanges.
The proposed framework comes as the government works on guidelines allowing listed companies and professional investors to buy and sell crypto assets.
The FSC announced a phased roadmap in February 2025, initially opening the market to non-profit organisations and virtual asset service providers before allowing listed companies and professional investors to participate.
Detailed rules for the later stages have yet to be released, with the regulator saying the timing is closely tied to legislation covering stablecoins and the broader digital asset market.
Asked whether corporate trading could begin this year, Kim said he was personally positive about several aspects of the plan but stopped short of providing a timetable.
The government is also preparing legislation governing stablecoins and other digital assets, although Kim said the submission schedule was still being discussed with the National Assembly and other government agencies.
The FSC would seek to move “as quickly as possible,” he said, in line with the government’s economic policy agenda for the second half of the year.
Kim said stablecoin regulation spanned several laws, with issuance expected to fall under the planned digital asset legislation, cross-border transfers under foreign exchange rules and payments under electronic financial transaction laws.
Industry representatives urged the government to establish an independent custody framework before fully opening the market to companies, arguing that the current exchange-centred structure was insufficient to support taxation, anti-money laundering controls and external audits.
Harry Ryoo, chief executive of digital asset custodian BDACS, estimated that the potential custody market involving domestic and overseas corporate clients could be worth at least 75 trillion won.
Ahn Do-geol, a lawmaker from the Democratic Party of Korea, called for faster follow-up measures, saying corporate participation could improve liquidity and price discovery while supporting related industries including custody, asset management and digital payments.
Ahn said the market should be opened alongside safeguards including custody systems, internal controls to prevent conflicts of interest and risk management standards.
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