The recent approval of spot Ethereum ETFs by the US Securities and Exchange Commission (SEC) has triggered pressure on South Korea’s financial regulators to consider allowing similar crypto exchange-traded funds in their market.
This approval in the US marked a significant shift, as many had anticipated a rejection for these ETFs, at least until May.
According to a report from The Korea Times, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) in South Korea are currently hesitant about permitting crypto assets to be traded on traditional securities markets. The FSC cited the Capital Markets Act as the basis for its skepticism towards crypto ETFs, which traditionally restricts ETFs to underlying assets such as real financial assets or securities like international currencies or commodities.
Jung Eui-jung, head of the Korean Stockholders’ Alliance, urged authorities to take a cue from the US and approve ETFs for Bitcoin and Ethereum. He emphasized the importance of this step in preventing investors, both in traditional finance and digital assets, from seeking opportunities elsewhere due to regulatory uncertainties.
The South Korean financial watchdog’s stance on crypto ETFs has remained cautious. Currently, South Korean crypto investors do not have the option to trade spot Bitcoin and Ethereum ETFs, and hopes for regulations allowing sales of Bitcoin futures ETFs were dashed in January.
Lee Bok-hyun, governor of the Financial Supervisory Service, acknowledged an ongoing internal debate surrounding virtual assets. While he personally holds a positive view, others within the agency express more caution. Lee emphasized the importance of considering all viewpoints and fostering open discussions before making any decisions.
The robust cryptocurrency market in South Korea has become a significant theme in the country’s political landscape. Ahead of the parliamentary elections in April, both major political parties made crypto-centric promises to attract voters.
President Yoon Suk Yeol’s People Power Party pledged to delay the implementation of a digital-asset tax, recognizing the growing influence of the crypto industry. Conversely, the opposition Democratic Party focused on loosening restrictions on ETFs, including those that would allow investment in US Bitcoin products, aiming to appeal to voters seeking easier access to cryptocurrency investments.
