South Korea’s virtual asset industry is urging the country to ease regulations that block collaboration between finance and virtual assets.

“Financial institutions are currently prohibited from equity investment or entering exchanges in the crypto industry, but there needs to be overarching principles,” said Ahn Chang-kuk, director general of the Financial Services Commission’s Financial Industry Bureau, on Wednesday.

Ahn’s remarks were made in a personal capacity at the 2025 Maeil Business Newspaper Virtual Asset Conference held at the FKI Tower Conference Center in Yeouido, Seoul.

Under the current regulatory regime, Korean financial holding companies are practically unable to invest in or cooperate with crypto custody firms or exchanges, making strategic ties between traditional finance and the virtual asset industry nothing more than wishful thinking.

In the United States, crypto management platform Fireblocks has formed a strategic partnership with BNY Mellon, the world’s largest custodian bank, to provide crypto services to clients.

Anchorage Digital, a digital asset bank, has received a banking license from the Office of the Comptroller of the Currency (OCC) and offers custody and brokerage services.

The U.S. Securities and Exchange Commission (SEC) approved the first spot Bitcoin exchange-traded fund (ETF) in January 2024.

This has been possible because, while the U.S. traditionally restricts cross-shareholdings between banks and non-financial companies under the Bank Holding Company Act, it has adopted a more flexible stance toward fintech and virtual assets.

Hong Kong’s Securities and Futures Commission (SFC) also approved the issuance of spot Bitcoin ETFs and spot Ethereum ETFs in April 2024, with the Ethereum ETF being the world’s first.

In June 2025, Hong Kong’s Financial Services and the Treasury Bureau (FSTB) unveiled the “LEAP Strategy” to integrate virtual assets into the real economy and financial markets.

The roadmap includes legal reforms, product expansion, real-world application, and talent development.

Hong Kong has also tested collaboration between crypto firms and traditional banks through regulatory sandboxes, connecting banks to tokenized deposit platforms and testing interbank settlements.

Building on these trials, regulators took the lead in shaping a framework to foster a sustainable tokenization market.

Korea, on the other hand, has seen only limited equity participation by large financial holding companies in domestic custody firms or infrastructure startups, creating an unfavorable environment for securing new growth drivers.

Regulators themselves acknowledge that the lack of collaboration between traditional finance and crypto firms could quickly cap the domestic market’s growth potential.

This contrast is starkly illustrated by the business models of U.S. cryptocurrency exchange Coinbase Global Inc. and Korea’s virtual asset service providers (VASPs).

Coinbase has diversified its revenue streams, including trading (51 percent), stablecoins (22 percent), blockchain rewards (14 percent), lending and interest (6 percent), and ETFs/subscriptions (8 percent).

By comparison, Korean VASPs derive 98 percent of their revenue from trading fees alone.

“This could be evidence of the lack of diversity and ecosystem in our country,” Ahn said.

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