South Korea’s Lee Jae-myung: Pro-Crypto President Faces Scandals in Leading Digital Asset Hub

Introduction: A Crypto Champion Takes the Helm

South Korea’s new president, Lee Jae-myung, sworn in on June 4, 2025, following a snap election, has emerged as a crypto-friendly leader in one of the world’s largest digital asset markets. Elected with 46.2% of the vote after the impeachment of his predecessor, Yoon Suk-yeol, Lee campaigned on bold cryptocurrency promises, including legalizing spot crypto exchange-traded funds (ETFs), allowing pension fund investments in digital assets, and launching a won-based stablecoin. However, his presidency is shadowed by ongoing controversies, including alleged bribery and a $1 billion property development scandal, which raise questions about his ability to deliver on these ambitious reforms. This article explores Lee’s crypto agenda, the scandals surrounding his leadership, and the implications for South Korea’s vibrant crypto ecosystem.

Lee’s Crypto Promises: A Vision for Financial Modernization

During his campaign, Lee positioned himself as a champion of South Korea’s 15 million crypto investors, one of the highest per capita globally. His key proposals include:

• Spot Crypto ETFs: Lee aims to legalize spot cryptocurrency ETFs, currently banned under South Korean law, following global trends like the U.S.’s approval of Bitcoin and Ethereum ETFs. The Financial Services Commission (FSC) has initiated a phased strategy to integrate institutional investors into crypto markets, and Lee’s push could accelerate this process.

• Pension Fund Investments: Lee proposed allowing the $854 billion National Pension Service to invest in digital assets, a move that could legitimize crypto as a mainstream asset class and boost market liquidity.

• Won-based Stablecoin: Lee’s most distinctive pledge is to issue a stablecoin backed by the South Korean won to modernize the financial system and curb capital outflows. This proposal, however, evokes memories of the Terra Luna collapse in 2022, which wiped out $40 billion in value and devastated South Korean investors, raising concerns about execution risks. These policies align with South Korea’s status as a crypto powerhouse, with trading volumes on exchanges like Upbit and Bithumb often rivaling global leaders. Lee’s pro-crypto stance was echoed by his conservative opponent, Kim Moon-soo, indicating bipartisan support for the industry.

Scandals Clouding Lee’s Leadership

Despite his forward-looking crypto agenda, Lee’s presidency is tainted by multiple legal entanglements, which critics argue could undermine his credibility and governance:

• Property Development Scandal: Lee faces charges related to a $1 billion land development project in Seongnam, where he served as mayor from 2004 to 2010. Allegations include favoritism and improper financial dealings, with the case still under investigation.

• Bribery Allegations: Lee is accused of accepting bribes during his tenure as mayor and governor of Gyeonggi province (2010–2018), further fueling perceptions of corruption.

• Illegal Remittances to North Korea: One of the most serious charges involves an alleged scheme to transfer funds to North Korea through an underwear company, purportedly to facilitate a visit to Pyongyang while Lee was governor. This case has raised national security concerns and drawn intense scrutiny.

• Misuse of Government Credit Cards: Additional allegations involve the improper use of public funds, adding to the list of legal challenges. These scandals, detailed in sources like CNN and CBS News, have led opponents to label Lee a “dangerous populist,” though his supporters argue his electoral victory reflects public frustration with establishment corruption and economic stagnation. Lee’s ability to navigate these legal battles while pushing his crypto agenda will be critical to his presidency’s success.

South Korea’s Crypto Landscape: Opportunities and Risks

South Korea boasts one of the world’s most active crypto markets, with 15 million investors and a culture of tech-savvy retail trading. The country’s exchanges, like Upbit, handle billions in daily volume, and its regulatory framework, while strict, has fostered innovation. The FSC’s ongoing discussions on crypto ETFs and institutional integration predate Lee’s election, suggesting a foundation for his policies to build upon. However, the Terra Luna collapse remains a cautionary tale. The failure of Do Kwon’s algorithmic stablecoin in 2022 not only wiped out billions but also eroded trust among retail investors, many of whom are wary of Lee’s won-based stablecoin proposal. Posts on X, such as from

@Mercules_thor

, highlight the tension between Lee’s crypto ambitions and the “scandals prevailing” in his administration, reflecting mixed sentiment among observers. Lee’s stablecoin plan must prioritize transparency and regulatory oversight to avoid repeating past mistakes.

Political and Economic Context

Lee’s election follows months of political turmoil, sparked by Yoon Suk-yeol’s impeachment in December 2024 over a botched martial law declaration. Lee, a former child laborer who rose to prominence through fiery speeches against corruption, capitalized on voter anger over rising housing costs, poor job prospects, and economic growth projected at less than 1% in 2025. His presidency faces immediate challenges, including navigating U.S. President Donald Trump’s tariff-driven trade war, which threatens South Korea’s export-driven economy. Lee has pledged to strengthen the U.S.-South Korea alliance and pursue dialogue with North Korea, a delicate balancing act given Trump’s allegations of Chinese interference in Lee’s election victory. These geopolitical pressures could divert attention from his crypto reforms, potentially delaying implementation.

Challenges to Lee’s Crypto Agenda

Lee’s pro-crypto policies face several hurdles:

• Legal Distractions: Ongoing criminal cases could consume Lee’s political capital, limiting his ability to push legislation through the National Assembly, where his Democratic Party holds a majority.

• Public Skepticism: The Terra Luna fallout has made investors cautious, particularly about stablecoins, requiring Lee to rebuild trust through robust regulation.

• Regulatory Complexity: Legalizing spot ETFs and pension fund investments will require coordination with the FSC and amendments to existing laws, a process that could face opposition from conservative regulators.

• Economic Priorities: With a sluggish economy and trade tensions, Lee may prioritize subsidies for childcare, youth, and local businesses over crypto reforms, as noted by Reuters. Despite these challenges, Lee’s campaign promises have raised expectations among South Korea’s crypto community, with analysts like those at Coinpedia suggesting his policies could drive market growth.

Future Outlook: Can Lee Deliver?

Lee’s presidency offers a rare opportunity to cement South Korea’s position as a global crypto leader. Legalizing spot ETFs could attract institutional capital, while a won-based stablecoin, if executed transparently, could enhance financial inclusion and reduce reliance on foreign stablecoins like USDT. Allowing pension funds to invest in crypto could further mainstream digital assets, though it risks backlash if markets turn volatile. However, Lee’s scandals pose a significant risk. If legal proceedings escalate, they could erode public trust and weaken his mandate, delaying or derailing his crypto agenda. The success of his stablecoin initiative will hinge on avoiding the pitfalls of Terra Luna, with rigorous audits and clear governance essential to gaining investor confidence. As noted in Cointelegraph, Lee’s ability to balance his crypto vision with economic and geopolitical challenges will define his legacy. In the short term, South Korea’s crypto market is likely to benefit from bipartisan support, as both Lee and Kim Moon-soo endorsed pro-crypto policies during the campaign. Long-term, Lee’s leadership could drive Bitcoin and altcoin price growth, with analysts like Bitget Research forecasting BTC at $180,000 by year-end 2025, partly due to global regulatory clarity.

Conclusion

President Lee Jae-myung’s crypto-friendly policies position South Korea to lead the global digital asset race, with plans for spot ETFs, pension fund investments, and a won-based stablecoin. Yet, his presidency is marred by scandals, including bribery and a $1 billion property development case, which threaten to undermine his credibility. As Lee navigates a sluggish economy, trade wars, and legal battles, his ability to deliver on crypto promises will shape South Korea’s role as a blockchain hub. With 15 million investors watching, Lee’s tenure could either propel the country’s crypto market to new heights or falter under the weight of controversy.