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South Korea urged to mirror US on cryptocurrency ETFs after ETH consensus
Last Updated: May 27, 2024 3:21am EDT | 2 minute read
The United States Securities and Exchange Commission approval of spot ETFs on Ethereum last week triggered pressure on South Korea’s financial regulators to greenlight similar cryptocurrency exchange-traded funds.
The approval of Ethereum ETFs last week marked a dramatic turnaround for the US market. Until then, most market participants expected a rejection for these ETFs, at least in May.
The Korea Times reports it Monday that the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) are reluctant to allow cryptocurrency trading on the traditional securities market.
The FSC cited the Capital Markets Act to justify its skepticism of crypto ETFs. The law limits ETFs to underlying assets, which are traditionally real financial assets or securities such as international currencies or commodities.
Jung Eui-jung, head of the Korean Shareholders’ Alliance, reportedly called on authorities to follow the United States and approve ETFs for Bitcoin and Ethereum. He believes this step is crucial to prevent investors, both in traditional finance and digital assets, from leaving Korea.
“Who would want to invest their money in a market that lags behind the rapidly evolving regulatory landscape?” Jung said.
South Korea’s financial watchdog blocks cryptocurrency ETFs
South Korean cryptocurrency investors currently do not have the ability to trade Bitcoin and Ethereum spot ETFs. Furthermore, in January financial authorities extinguished any hope of regulations allowing the sale of Bitcoin futures ETFs in the near future.
In March, Lee Bok-hyun, governor of the Financial Supervisory Service, acknowledged the internal debate on virtual resources. While she personally has a positive opinion, others within the agency are expressing more caution, he said. Lee stressed the importance of considering all points of view and having open discussions before moving forward.
“Among the authorities, I am one of those who are positive about virtual assets, while there are others who are wary and we need to listen to their opinions too. We are discussing it internally,” she said.
Korean parties compete for crypto voters
In a surprising turn of events, South Korea’s robust cryptocurrency market has become a central topic in the run-up to the country’s parliamentary elections in April. Both major political parties saw a opportunity to woo voters with crypto-centric promises.
President Yoon Suk Yeol’s People Power Party has acknowledged the growing influence of the cryptocurrency sector and pledged to delay the implementation of a tax on digital assets, a move likely to resonate with cryptocurrency investors.
In contrast, the opposition Democratic Party has focused on easing restrictions on ETFs, including those that would allow investments in U.S. Bitcoin products. This strategy aimed to attract voters seeking easier access to cryptocurrency investments.