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In a bold move to stabilize its struggling currency markets, South Korea has lifted its 14-year ban on Kimchi bonds, signaling a major policy shift as the nation battles foreign exchange pressures fueled by soaring stablecoin investments.
Meanwhile, Singapore has launched a regulatory crackdown on unlicensed crypto firms, forcing many to either comply or exit the country’s digital asset hub.
South Korea Ends Kimchi Bond Ban to Ease Forex Pressures
South Korea’s central bank announced this week that it would allow the issuance of Kimchi bonds — foreign currency-denominated bonds issued by local or foreign companies — for the first time since 2011.
The Bank of Korea (BoK) says the move is designed to boost liquidity and stabilize the weak Korean won, which has been under pressure due to high capital outflows and surging interest in digital assets.
“This measure is expected to contribute to resolving the imbalance in forex supply and demand,” BoK stated.
The nation’s forex reserves had fallen to $404 billion in April — the lowest since mid-2020. The central bank previously banned Kimchi bonds to limit risky overseas borrowing, which played a role in previous financial crises.
However, with South Koreans investing an estimated $42 billion in offshore digital assets during Q1 alone — alongside regulatory changes favoring digital assets under President Lee Jae-myung — the BoK now sees easing the bond ban as essential.
Korea Capital Market Institute expert Hwang Sei-woon told the Financial Times that this signals a longer-term strategy to open up Korea’s forex markets.
Singapore Clamps Down on Offshore Crypto Firms
While Korea moves to boost market liquidity, Singapore is tightening its grip on crypto.
Starting July 1, all Singapore-based virtual asset service providers (VASPs) serving overseas clients must obtain a new Digital Token Service Provider (DTSP) license under rules enacted by the Monetary Authority of Singapore (MAS).
Failure to comply can result in:
- Fines up to $200,000
- Jail terms of up to 3 years for operators
The MAS says there will be no grace period for violators. The law applies regardless of the size of a company’s foreign clientele.
This measure effectively closes a loophole that let Singapore-based crypto firms serve global customers while escaping strict local rules.
Major crypto exchanges, including Bybit and Bitget, are already considering relocating to Dubai or Hong Kong, according to Bloomberg.
Binance, however, says its Singaporean workforce — mainly back-office roles — will remain, though the company does not hold an MAS exchange license.
Key Takeaways
- South Korea lifts its Kimchi bond ban to boost forex reserves amid record-high crypto investments and stablecoin growth.
- Singapore enforces strict new licensing rules for crypto firms serving overseas clients, risking an exodus of major exchanges.
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