Policy Background: Virtual Assets Enter Debt Review
According to Yonhap News reported on June 26, the South Korean government is improving the ‘New Start Fund’ debt adjustment project for small business owners and self-employed individuals. The core change is incorporating virtual assets into the assessment of applicants' repayment capacity. Previously, the fund relied primarily on applicants’ financial statements and data from the public administrative information network to verify debtors' income and assets. However, this method struggled to identify applicants’ virtual asset holdings, potentially allowing some crypto-holding debtors to receive debt relief disproportionate to their actual repayment ability.
Specific Measures: Cooperation with Top Five Exchanges for Balance Certificates
To address this shortfall, the Korean government has been negotiating with the five major Korean won-denominated crypto exchanges since January of this year. It has now formally introduced virtual asset balance certificates into the property evaluation process. Applicants identified as members of these exchanges must now directly submit their crypto balance proofs to the fund. Under the revised system, the debt relief rate is adjusted according to the applicant's repayment capacity, which now explicitly considers their cryptocurrency holdings. This means that applicants holding larger amounts of virtual assets may receive a proportionally lower debt reduction.
Industry Impact: Regulatory Recognition and Compliance Costs
This policy change has drawn attention in the Korean cryptocurrency market. On one hand, it marks the official recognition of virtual assets as quantifiable property in debt review processes, enhancing the legitimacy of crypto assets within the financial system. On the other hand, debtors can no longer treat crypto holdings as “invisible wealth” and must report them truthfully; for exchanges, cooperating with the government to provide customer balance certificates adds operational and compliance costs. Notably, the top five Korean won-denominated exchanges—including Upbit, Bithumb, Coinone, Korbit, and GOPAX—are already participating in this program. As the regulatory framework matures, transparency of virtual assets within Korea’s financial system will further improve. However, market analysts point out that the policy currently applies only to the debt adjustment program for small business owners and self-employed individuals, so its direct impact on overall crypto trading volumes in the short term remains limited.