South Korean Equities Boosted by Crypto-Friendly Policy
South Korea's stock market has experienced significant growth amid renewed enthusiasm around cryptocurrency, driven by new presidential support for won-backed digital tokens. The Kospi Composite index has surged nearly 30% in 2025, positioning South Korea as Asia's best-performing market during the year's first half.
Retail Investors Fuel Demand for Digital Currency-Linked Stocks
President Lee Jae-myung’s pledge to permit cryptocurrency assets backed by the South Korean won has spurred intense retail investor interest. Companies involved in cryptocurrency and digital currency projects, such as LG CNS and Kakao Pay, have seen notable stock price volatility and gains. For instance, Kakao Pay’s shares more than doubled in value amid this surge.
Stablecoins and Fintech Stocks Attract Speculative Attention
Speculative movement has also been evident on South Korea’s Kosdaq market, especially among fintech firms connected to stablecoins. Fintech security company Aton jumped 80%, and game producer ME2ON tripled after launching a dollar-pegged stablecoin targeting casino applications. This speculative activity has led investors to leverage margin loans, totaling roughly $15 billion, to maximize exposure despite the absence of detailed cryptocurrency regulations.
Government Moves to Support Digital Token Development
The government’s stance has grown more favorable with the appointment of Kim Yong-beom, a digital token advocate, as chief policy adviser. A recent parliamentary bill proposes enabling companies with a minimum won equity capital to issue won-based stablecoins, underscoring official efforts to promote a regulatory framework. Meanwhile, the Bank of Korea continues preparations for a central bank digital currency in response to robust trading volumes of USD-pegged stablecoins.
Balancing Innovation with Regulatory Concerns
Despite the growing enthusiasm, concerns linger over stablecoin issuance by non-bank entities and its implications for monetary policy and capital flows. Bank of Korea Governor Rhee Chang-yong has highlighted these risks, calling for cautious oversight as South Korea navigates the balance between crypto innovation and economic stability.
