Lee Jae-myung’s election win sparks hopes for crypto-friendly policies. Broader financial reforms also loom.
South Korea has elected Lee Jae-myung as its new president after months of political turmoil, raising expectations of significant shifts in the nation’s financial services industry, particularly with regard to digital assets.
The election was triggered by the impeachment and removal of former President Yoon Suk Yeol for violating Korea’s constitution by declaring martial law in December to try to force forward legislation to pass the annual budget.
Lee, of the Democratic Party, was inaugurated on Wednesday (4 June) following a decisive win over Kim Moon-soo of the People Power Party (PPP).
Digital assets and crypto
Lee’s campaign pledges to be more friendly toward digital assets have raised expectations for the cryptocurrency industry for a more accommodating regulatory environment.
During his campaign, Lee supported easing regulations on initial coin offerings (ICOs) and expressed a desire to see South Korea become a leader in the digital asset space.
He also pledged to review the country’s capital gains tax on cryptocurrency investments, potentially raising the threshold or delaying its implementation.
Some reports suggest that Lee’s administration may consider establishing a framework for regulating stablecoins and central bank digital currencies (CBDCs).
Financial services regulation
Lee has emphasised the importance of reviving economic growth and supporting small businesses, which could lead to changes in capital market policy. He has also advocated for greater economic parity and pledged to address issues such as rising costs of living and economic polarisation.
During his campaign, Lee pledged to reorganise the Ministry of Economy and Finance (MOEF) and the Financial Services Commission (FSC) should he be elected. He said the FSC manages both supervisory and policy roles, resulting in excessive overlap. He expressed a need to separate and streamline these functions.
Potentially, the FSC’s domestic financial policymaking authority would be transferred back to MOEF, and the FSC’s supervisory functions would be integrated with the Financial Supervisory Service (FSS).
The FSS could also be split into two separate entities: one focusing on financial supervision and the other on protecting financial consumers.
Trade and international relations
Lee’s approach to international relations, particularly with the US, will be closely watched. He faces the immediate challenge of negotiating a trade deal with the US under President Trump to mitigate the impact of existing tariffs.
His team has pledged to re-establish trust with the US, which they believe was weakened during the period of political instability. Lee’s foreign policy advisor has stated that the alliance with the US would remain the “cornerstone” of South Korea’s diplomacy.
While Lee has emphasised the importance of the trilateral South Korea-US-Japan security partnership, he has also called for healing badly frayed ties with North Korea, saying peace can drive South Korea’s economic growth.
Prior to his election win, Lee told supporters he would not forget that the duty of a president was to unite the people. He said he would find a way for the country to coexist with North Korea through dialogue and communication.