Policy Background: South Korea's 'New Start Fund' and the Inclusion of Virtual Assets
According to Yonhap News, the South Korean government is reforming the 'New Start Fund', a debt adjustment program targeting small business owners and self-employed individuals. The core change is the official inclusion of virtual assets in the debt review process. The fund aims to help financially distressed groups gain a fresh start through debt relief, but it previously relied solely on applicants' submitted financial statements and data available through public administrative information networks to verify income and assets. This method failed to identify investment assets such as stocks, funds, and crypto holdings, allowing some debtors to conceal assets and apply for higher relief.
The revision marks official recognition of virtual assets as quantifiable financial attributes in debt adjustment. The Financial Supervisory Service (FSS) and other agencies have repeatedly warned that debtors increasingly use crypto assets to hide wealth, as traditional credit reporting systems cannot cover on-chain assets.
Reform Details: How Crypto Assets are Assessed
Under the revised system, the debt relief rate will be adjusted based on the applicant's repayment capacity, which now explicitly includes their crypto asset holdings. To solve the data acquisition problem, the fund has been consulting with South Korea's top five won-denominated crypto exchanges since January 2026 (Upbit, Bithumb, Coinone, Korbit, GOPAX) and has introduced virtual asset balance certificates into the property assessment process.
Specifically, applicants who are members of the above exchanges must directly submit virtual asset balance certificates issued by the exchanges. The fund will convert the types, quantities, and recent market values of the assets into Korean won and include them in total asset calculation. Refusal to submit or provision of false certificates may lead to a reduced relief rate or even disqualification. Additionally, the fund plans to introduce on-chain address tracking technology to cross-verify with exchange data and further prevent concealment.
Impact on the Crypto Market and Debtors
For debtors, holding crypto assets will no longer be 'invisible wealth' but may directly reduce the debt relief ratio they can obtain. This forces crypto investors in debt distress to reevaluate their positions before applying for debt adjustment: whether to retain assets and bear higher repayment pressure, or liquidate them to qualify for higher relief. In the short term, this may trigger some retail selling pressure on local exchanges.
From a regulatory perspective, this marks the first time South Korea has formally incorporated crypto assets into the assessment framework of social welfare and debt relief programs, beyond anti-money laundering and tax compliance. As the 'New Start Fund' accumulates experience, similar measures may be extended to other public relief programs (e.g., housing loans, student loans), further compressing the anonymity of crypto assets. Industry observers believe South Korea is accelerating the construction of a 'visible' crypto economy, which is beneficial for long-term compliance development.