South Korea's Financial Services Commission (FSC) recently announced new policies that seem favorable at first glance, but a closer look reveals many issues. Will the money truly flow into the market? Where will it go once inside?

The policy framework is actually quite strict. Institutions can only invest up to 5% of their own capital in cryptocurrencies each year. On the surface, 5% doesn't seem like much, but considering the capital base of South Korea's large corporate groups, which amounts to tens of billions of dollars, it’s significant.

The scope of investment is also clearly defined: only the top 20 cryptocurrencies by market cap can be allocated, and they must be listed on South Korea's five major exchanges. The whitelist is adjusted every six months, with regulatory oversight being quite strict. Actual trading can only begin at the end of 2026; for now, it's just policy signals, and actual funds entering the market will have to wait nearly a year.

The logic behind these rules is quite clear—want large institutional funds but don't want them causing trouble. So, a series of restrictions have been put in place.

While 3,500 eligible institutions sound like a lot, how many of them are truly willing to participate in the first batch? Industry estimates suggest that no more than 500 are willing to take the risk initially. The rest will likely wait and see, following the lead of early movers. In South Korea's chaebol culture, those who stand out often face backlash.

A rough estimate: assuming these 500 institutions use an average of 1% of their own capital for investment (the cap being 5%), based on the total market value of listed companies in South Korea, this could release approximately $10-15 billion in new funds.

Where will this money ultimately flow? Almost certainly—BTC and ETH. The reason is simple: policies restrict purchases to the top 20 cryptocurrencies, and they must be traded on Korean exchanges with trading pairs. Under these constraints, Bitcoin and Ethereum are undoubtedly the safest, most liquid, and easiest options to access.