South Korea now treats crypto like other assets when deciding who gets public debt relief.
Key points
- The Financial Services Commission (FSC) and Korea Asset Management Corporation (KAMCO) have revised the New Start Fund so virtual assets and unlisted shares are included in asset reviews.
- Debt forgiveness will be more closely tied to an applicant’s repayment capacity; reductions will be scaled down for borrowers judged able to repay.
- A Credit Information Act amendment (effective Aug. 13) lets debt-restructuring agencies obtain property data in bulk, including regular feeds of crypto and unlisted-share information.
- These changes fit into a broader push to regulate and integrate digital assets—FSC proposals to expand a regulatory sandbox and a December-start cross‑border virtual asset transfer licensing framework are also moving forward.
What changed
Following a June 25 meeting between the FSC and KAMCO, authorities said they will strengthen property assessments, debt-adjustment criteria and post-approval monitoring for the New Start Fund, a restructuring program for small business owners and self-employed borrowers.
- Cryptocurrency and unlisted shares: Investment assets that were previously hard to verify through standard financial statements and government records will now be examined as part of applicant assessments. Since January, applicants identified as users of South Korea’s five major won-based exchanges have been required to submit virtual-asset balance certificates; KAMCO has used those documents in eligibility reviews. Reporting of unlisted-share holdings began in May, though shares in privately run companies operated directly by applicants remain excluded to protect business income.
- Repayment-capacity linkage: Under current New Start Fund rules, unsecured debts delinquent more than 90 days can see principal reductions of 60–80%, with up to 90% for low-income or vulnerable borrowers. The FSC said that fixed minimum reductions limited the program’s ability to distinguish borrowers with stronger repayment ability. The new approach reduces relief for those with greater capacity: borrowers whose repayment capacity exceeds 100% will now face a minimum principal reduction of 30% (down from the previous 60% floor), and overall debt relief will be lowered by 5–30 percentage points depending on repayment ability.
Data access and verification
Amendments to the Credit Information Act, effective Aug. 13, will permit government restructuring agencies to obtain property information in bulk. The FSC said authorities will receive regular cryptocurrency and unlisted-share data from relevant institutions to verify applicants’ declarations both before and after restructuring approvals.
Broader regulatory context
The New Start Fund changes arrive amid a wider regulatory push on digital assets in South Korea. The FSC has proposed expanding its regulatory sandbox to cover digital-asset laws, and the government approved a licensing framework for cross-border virtual asset transfers that takes effect in December. Policymakers are acting as crypto activity grows across the financial sector: crypto-based overseas remittances have reportedly jumped 380% over the past three years as banks and fintechs roll out blockchain payment infrastructure.
Why it matters
Bringing crypto and unlisted shares into routine asset checks aims to better target public support and reduce the risk of relief being granted to borrowers who can afford repayment. The move also signals continued integration of digital-asset data into mainstream financial oversight—but it raises questions about data sharing and privacy as agencies obtain higher-frequency access to individuals’ crypto holdings.
Read more AI-generated news on: undefined/news
