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South Korea sandbox to cover crypto rules, easing fintech restrictions
FSC's sandbox expansion targets virtual asset rules, faster approvals for fintech firms, and new cross-border crypto licensing regime taking effect December.
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South Korea plans to let blockchain and fintech firms apply for regulatory exemptions under its financial sandbox program, including exemptions from the Virtual Asset User Protection Act. The shift signals a measured opening of the country's crypto rulebook.
The Financial Services Commission announced the proposal on June 19 during a fintech policy event chaired by FSC Chairman Kim Byoung-hwan, according to local media.
The agency said it wants to broaden the list of laws eligible for sandbox treatment as part of a wider financial innovation overhaul. The current scope of eligible legislation is too narrow, officials said, limiting the services that can enter the sandbox. Expanding that list would give regulators more flexibility to approve new services as technology and market conditions change, the FSC added.
The commission identified the Internet-Only Bank Act and digital asset regulations as additional laws it may bring under the sandbox umbrella.
The proposal is part of a broader package intended to increase sandbox participation, protect new business models, and help fintech companies make the transition into the regulated financial sector. The FSC said it will seek amendments to the Enforcement Decree of the Financial Innovation Support Act during the third quarter to support the expanded framework.
Officials also pledged to work with government ministries and industry groups to pinpoint areas where financial firms need regulatory flexibility. “The objective is to encourage the development of a wider range of innovative financial services,” the FSC stated.
The agency plans to speed up approvals for sandbox applications that face little regulatory disagreement. A new expert committee would conduct additional reviews before cases reach decision-making bodies.
Authorities also outlined plans to expand so-called planned sandboxes, where regulators design pilot projects and test services before pursuing permanent rule changes. Proposed areas include AI-based financial systems, fintech-driven financial inclusion initiatives, and the removal of network separation requirements for qualified financial institutions.