South Korea is preparing for a crucial presidential election on June 3 to select the successor of Yoon Suk Yeol. Similarly to the US, the country’s estimated 15 million crypto investors – making up at least 30% of the population – have emerged as a significant voting group.

In light of this, presidential candidates are focusing on digital asset policy proposals to appeal to young, tech-savvy voters. This appeal is growing due to the increasing interest in regulated investment products and financial inclusivity.

Reports from local media indicate that the leading candidates, Lee Jae-myung of the Democratic Party and Kim Moon-soo of the People Power Party, are spearheading pro-crypto initiatives.

Both candidates have promised to legalize spot crypto ETFs (exchange-traded funds). This move is currently prohibited by Korean laws, but if allowed, these financial tools would enable investors to access Bitcoin and other digital assets through traditional stock markets.

All three key South Korean presidential contenders express support for Bitcoin ETFs and institutional investment. Presently, Bitcoin ETFs and institutional investments are banned in Korea, with all trading volume coming from retail investors, as highlighted by Ki Young Ju, CEO of CryptoQuant.

Lee Jae-myung has differentiated his campaign by proposing the development of a stablecoin market backed by the won currency. This initiative aims to decrease dependence on foreign stablecoins like USDT and USDC, as well as reduce capital outflows abroad.

Although South Korea currently prohibits the issuance of domestic stablecoins, Lee's plan involves creating a regulatory path under the upcoming Digital Asset Basic Act. This proposed legislation, set to be introduced soon, will address the legal status, issuance, and circulation of digital assets. It will also require stablecoin issuers to register with the Financial Services Commission and maintain a reserve of at least 50 billion won.

During the first quarter of the year, domestic crypto exchanges in South Korea experienced significant outflows, a considerable portion associated with stablecoins pegged to the US dollar. However, concerns have been raised regarding possible macroeconomic risks related to private sector money creation through stablecoins.

Additionally, there is an emphasis on institutional adoption, with Lee’s team proposing that prominent entities like the National Pension Fund be allowed to invest in digital assets once stability criteria are met. These proposed initiatives align with broader government plans to lift the ban on corporate crypto investment and integrate digital assets into capital markets.

While these proposals are promising, skepticism remains until concrete actions are taken. Some voters are cautious of candidates making superficial pledges regarding crypto policies while demonstrating a lack of understanding when questioned about pertinent topics.

As South Korean presidential candidates increasingly embrace crypto, the government is gearing up to unveil the second phase of its crypto regulatory framework later in the year. Alongside this, efforts to enhance investor protection are evident, as highlighted by the government's action to have unregistered foreign crypto exchanges blocked by Google.

The prominence of crypto in South Korea's presidential election underscores the significance of digital assets as both an opportunity and a risk.