South Korea ‘Unleashes’ Corporate Crypto: 5% Equity Cap & Top 20 Token Limit

South Korea’s Financial Services Commission (FSC) has shattered a nine-year regulatory prohibition, officially allowing public corporations to invest up to 5% of their shareholder equity in crypto assets as of January 12, 2026. The move, characterized by analysts as a massive liquidity event, comes with a strict caveat: institutional capital is legally restricted to the top 20 assets by global market capitalization.

The ‘Blue Chip’ Funnel

The new framework forces corporate treasury desks into a narrow funnel. Unlike retail traders who speculate on long-tail assets, South Korean corporations, including conglomerates previously sidelined since 2017, can now legally allocate capital solely to high-liquidity networks like Bitcoin (BTC) and Ethereum (ETH).

Market data reflects the anticipated consolidation. Bitcoin hovered near $90,640 (-0.2%), while Ethereum held $3,110 (+0.3%) as traders front-ran the expected corporate bid. The restriction effectively bifurcates the market: institutional capital will buoy the majors, while the remaining 99% of crypto assets are legally invisible to Korea’s corporate sector.

The Liquidity Paradox

While the headline reads “adoption,” the fine print suggests a supply squeeze. Analysts note that the regulation creates a one-way street for liquidity. By limiting activity to spot purchases on the nation’s top five regulated exchanges (Upbit, Bithumb, Korbit, Coinone, and INEX), the FSC has engineered a mechanism where corporate inflows remove float from the order books without providing two-way market-making liquidity.

The regulator’s “liquidation only” rule creates a bizarre market dynamic where the first institutional wave is designed to drain liquidity, not add it.

This “drain” dynamic implies that while buy pressure will increase for the Top 20, volatility may spike as available float decreases. Treasury desks are not day traders; they are buying to hold, effectively removing coins from circulation for the duration of the fiscal year.

Institutional Context

This policy reversal addresses the $110 billion in capital outflows witnessed in 2025, where domestic firms moved funds offshore to gain crypto exposure. By domesticating this flow, the FSC retains capital control but explicitly excludes retail investors from these high-tier account privileges, deepening the moat between “smart money” access and public speculation.

Dollar-denominated stablecoins like USDT and USDC remain in regulatory limbo, with their inclusion in the “eligible asset” list still under debate. Until resolved, corporate inflows will likely concentrate purely on volatile Layer 1 assets rather than stable collateral.