South Korea
Legislative and Regulatory Amendments
- Financial Services Commission (FSC)
The FSC announced that the government approved the revision bill for the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) intended to establish new sanctions mechanisms against unfair trading and illegal short sale activities, set to take effect on April 23, 2025, alongside the revised FSCMA and subordinate regulations.
Date of Release: 14 April 2025 Implementation on: 23 April 2025 Applicable to: Financial institutions and market Participants
Sale of Virtual Assets by Non-profit Corporations and Exchanges will be Allowed from June
The FSC finalised new guidelines allowing non-profit organisations and virtual asset exchanges to sell virtual assets under strict conditions. These include requirements for transparency, anti-money laundering safeguards, and restrictions on eligible assets and transaction volumes to minimise market disruption and prevent conflicts of interest.
Date of Release: 2 May 2025 Implementation on: 1 June 2025 Applicable to: Financial institutions and market Participants
FSC Announces Plan to Implement Third stage Stressed DSR Rule as Scheduled from July 1
The FSC confirmed it will implement the third stage stressed Debt Service Ratio (DSR) rule starting July 1, 2025, to strengthen household debt management. This rule applies a higher stress rate (1.5%) to most household loans, except for non-Seoul area mortgages, which will remain under the second-stage rule (0.75%) until year-end. The FSC aims to curb rising household loans, especially amid expectations of interest rate cuts, and will continue monitoring financial institutions' debt management efforts.
Date of Release: 20 May 2025 Implementation on: 1 July 2025 Applicable to: Financial institutions and market Participants
The FSC introduced new measures to curb the rapid growth of household debt, particularly driven by mortgage loans in the Seoul metropolitan area. These include stricter loan-to-value (LTV) ratios, caps on mortgage and credit loans, and expanded self-regulatory practices across all financial sectors. The measures aim to limit speculative housing purchases and ensure financial stability, with special provisions to protect non-speculative and lower-income borrowers.
Date of Release: 27 June 2025 Implementation on: 27 June 2025 Applicable to: Financial institutions and market Participants
Consultations
- Financial Services Commission (FSC)
FSC Proposes Legislative Changes to Improve Regulations on Financial Holding Companies
The FSC has issued a preliminary notice of legislative changes to amend the Financial Holding Companies Act and its Enforcement Decree, aiming to enhance synergies within financial holding companies and enable more agile responses to evolving external conditions. The proposed revisions include easing fintech investment limits, allowing fintech subsidiaries to own their own subsidiaries, simplifying work consignment approval rules, and permitting the operation of institution-only private equity funds by financial holding companies' grandchild subsidiaries. These changes are intended to promote innovation and efficiency within the financial sector and will undergo public comment before legislative review and approval processes.
Consultation Period: 14 April – 26 May 2025
Applicable to: Financial institutions and market Participants
Rule Change Proposed to Increase Maximum Deposit Protection Coverage to KRW100 MN from September 1
The FSC of South Korea announced a rule change to increase the maximum deposit protection coverage from KRW 50 million to KRW 100 million, effective September 1, 2025. This is the first increase in 24 years and aims to enhance depositor protection, reduce the need to split savings across institutions, and align Korea’s standards with international norms.
Consultation Period: 16 May – 25 June 2025 Applicable to: Financial institutions and market Participants
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