The US Securities and Exchange Commission’s approval of spot Ethereum ETFs last week has ignited pressure on South Korea’s financial regulators to greenlight similar crypto exchange-traded funds.
Last week’s approval of Ethereum ETFs marked a dramatic reversal for the US market. Up until then, most market participants were expecting a rejection for these ETFs, atleast in May.
The Korea Times reported Monday that the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) are hesitant about allowing crypto assets to be traded on the traditional securities market.
The FSC cited the Capital Markets Act to justify its skepticism towards crypto ETFs. The Act restricts ETFs to underlying assets, which are traditionally real financial assets or securities like international currencies or commodities.
Jung Eui-jung, head of the Korean Stockholders’ Alliance, reportedly called for the authorities to follow the US 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 fast-changing regulatory landscape?” Jung said.
South Korea Financial Watchdog Stalls on Crypto ETFs
South Korean crypto investors currently don’t have the option to trade spot Bitcoin and Ethereum ETFs. Additionally, financial authorities in January shut down any hopes for regulations allowing sales of Bitcoin futures ETFs in the near future.
In March, Lee Bok-hyun, governor of the Financial Supervisory Service, acknowledged the internal debate surrounding virtual assets. While he personally holds a positive view, others within the agency express more caution, he said. Lee stressed the importance of considering all viewpoints and having open discussions before moving forward.
“Among authorities, I am one of those who are positive about virtual assets, while there are others who are wary, and we need to hear their opinions as well. We are internally discussing it,” he said.
Korean Parties Vie For Crypto Voters
In a surprising turn of events, South Korea’s robust cryptocurrency market became a central theme in the lead-up to the country’s parliamentary elections in April. Both major political parties saw an opportunity to woo voters with crypto-centric promises.
President Yoon Suk Yeol’s People Power Party acknowledged the growing influence of the crypto industry and pledged to delay the implementation of a digital-asset tax, a move likely to resonate with crypto investors.
In contrast, the opposition Democratic Party focused on loosening restrictions on ETFs, including those that would allow investment in US Bitcoin products. This strategy aimed to attract voters seeking easier access to cryptocurrency investments.
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