[Exclusive Interview] Kim Nam-guk "Korean Crypto Industry Resembles Crisis of Late Joseon... Decisive Opening Needed"

Exclusive Interview with Former Democratic Party Representative Kim Nam-guk

'Golden Time' for Korean Crypto Industry

Continued Path Will Worsen Talent, Capital, and Business Exodus

Will Lose Competitiveness if Closed Regulations Continue

Strategic Bitcoin Reserves Premature

Should Be Discussed After US Official Adoption

"I want to tell financial authorities: Who exactly is today's Heungseon Daewongun? The longer we delay Bitcoin spot ETF approval, the further we fall behind in the global market, and we'll end up paying a higher price as we're dragged along."

Former Democratic Party Representative Kim Nam-guk (pictured) made these remarks in an exclusive interview with BloomingBit on the 5th, warning that Korea faces falling behind in global competition due to the government's regulation-focused cryptocurrency policies.

Kim stated, "I believe institutional improvements are needed to enable Bitcoin spot ETF trading in Korea," adding, "In the late Joseon period, Heungseon Daewongun implemented strong isolationist policies to prevent foreign invasion and internal chaos, but by rejecting global trends, he ultimately missed Korea's opportunity for modernization. Korea's financial market now stands at a similar crossroads."

He continued, "While Bitcoin spot ETFs have been approved and traded in global financial markets including the US, leading to increased institutional investor participation, we cannot utilize such financial products in Korea due to interpretations of the Capital Markets Act. This is very concerning as it goes beyond simply limiting investor choices and could isolate our financial market from global trends."

We asked the former representative, who returned to Yeouido last month after being acquitted of allegations of false cryptocurrency holdings disclosure after two years, about the rapidly changing global cryptocurrency market following Trump's election and the domestic regulatory situation.

Without Change, Both Talent and Capital Will Leave Korea

The former representative expressed frustration with the government's lukewarm attitude despite the changing global regulatory landscape following the election of pro-cryptocurrency US President Donald Trump. He predicted that if authorities maintain current regulatory policies, Korea will lose both talent and capital to countries actively promoting blockchain industries like the US and Singapore.

Kim said, "While regulation of specific industries is essential to protect public interest and create fair competitive environments, excessive regulation can limit industrial development and corporate innovation. Currently, Korean cryptocurrency industry regulations only recognize digital assets as speculative illegal assets, focusing excessively on solving market side effects."

He continued, "While the US and other countries are racing toward the possibilities of the blockchain market, we're falling behind. Though late, we need balanced regulatory policies that can enhance transparency and stability in the cryptocurrency market while promoting technological innovation. If this frustrating situation continues, talented individuals, capital, and even companies will leave the domestic market."

Need for Industry-Friendly Regulations to Build Competitiveness

While countries actively fostering cryptocurrency industries, including the US, prioritize supporting the issuance and listing of their domestic coins, Korean regulatory authorities are imposing even stricter standards on 'Kimchi coins' (cryptocurrencies associated with Koreans or Korean companies). Kim argued that overcoming this situation and establishing industry-friendly regulations is necessary to build national industrial competitiveness.

He stated, "Korea should establish reasonable and transparent listing criteria so domestic projects can receive fair opportunities and support, and if necessary, consider policies that prioritize domestic coins. Without this, growth, development, and strengthening competitiveness in the blockchain industry is impossible."

He added, "Recently, Korean companies have been driven to survival crises due to weakened technological competitiveness, threatened by countries like China. In this situation, the blockchain industry has great value and significance as a new growth engine."

Kim also emphasized that building global competitiveness in exchanges, the core institutions serving as distribution hubs for the cryptocurrency industry, is more important than anything else. He argued that exchanges should be supported to create innovative services and new business models.

He predicted, "Overseas exchanges like Binance are expanding their businesses centered on regulation-friendly countries, creating market trends through various attempts in relatively flexible environments. They're collecting money from investors worldwide while competing in the global market. However, domestic exchanges are forced into bleeding competition over limited users and markets. If exchanges cannot keep up with global trends, the isolation of the domestic blockchain ecosystem and industrial decline will accelerate."

Traditional Finance Needs Blockchain Innovation... STO and RWA Infrastructure Required

Kim stated that traditional finance should also actively embrace blockchain technology to maximize industrial efficiency.

He said, "Institutionally embracing Security Token Offerings (STO) and Real World Asset tokenization (RWA) can clearly help develop both the cryptocurrency market and domestic financial market. STOs can enhance investor protection and transaction efficiency through connections with the securities market, while RWA has great potential to expand liquidity through digitalization of various assets such as real estate, bonds, and artwork."

However, he added, "Rather than hasty implementation, I think it's most important to proceed in a balanced way while thoroughly reviewing legal and institutional gaps. It seems necessary to gradually improve the system while harmonizing with existing financial systems. We need to create an institutional foundation suitable for the domestic financial market by referencing major global regulatory jurisdictions like the US."

Strategic Bitcoin Reserves for Korea Still Premature

Last weekend, President Trump caused major ripples in the cryptocurrency market by announcing plans to adopt cryptocurrencies including Bitcoin (BTC), Ethereum (ETH), as well as Cardano (ADA), XRP, and Solana (SOL) as US strategic reserve assets.

Kim believes it's too early to discuss cryptocurrency strategic reserves in Korea, unlike in the US.

He said, "While cryptocurrencies including Bitcoin are gradually gaining status in the global financial market, with some countries and local governments considering them as strategic assets, I believe it's premature to discuss this in Korea's situation."

He continued, "Including something as a national strategic asset means incorporating it as part of foreign exchange reserves like the dollar, but cryptocurrencies still have high price volatility and their legal and institutional status internationally is not clearly established. If the US officially incorporates Bitcoin as a national strategic asset, then we can discuss it without being too late. Rather than hastily following suit now, a more realistic approach would be to first research the possibilities for institutional utilization."

Lee Young-min, BloomingBit reporter 20min@bloomingbit.io