In the wake of the recent approval of spot Bitcoin exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC), the South Korean government has reaffirmed its commitment to maintaining the ban on such products.
South Korean regulators assert that there will be no policy shift, and cryptocurrencies will not be recognized as financial assets.
South Korea has consistently held a stringent stance on cryptocurrencies since 2017, prohibiting financial institutions from investing in these digital assets. The Financial Services Commission (FSC) emphasized that this approach aims to stabilize the financial market and protect investors.
An official from the Financial Services Commission reiterated the country’s commitment to stabilizing the financial market and protecting investors, stating,
“The government has consistently maintained the principle of prohibiting financial institutions from investing in virtual assets in order to stabilize the financial market and protect investors.” He further added, “There are no changes in our stance.”
Although futures ETFs have been allowed in the States and spot Bitcoin ETFs already operate in countries such as Hong Kong, Germany, Canada, and now the U.S., the South Korean official indicated that these developments are not new or surprising.
Legal restrictions in Korea also make launching a virtual asset ETF impossible, as the Capital Markets Act only lists financial investment products, currencies, and general merchandise as eligible underlying assets for ETFs.
Furthermore, financial authorities in South Korea oppose amending the law to include cryptocurrencies as underlying assets for ETFs. They argue that the U.S. financial sector was able to withstand the collapse of the virtual asset market because it also prohibits financial institutions from investing in them.
SEC Chairman Gary Gansler has clarified in statement that the decision to approve the spot Bitcoin ETF was “limited to cash exchange-traded products (ETPs) holding Bitcoin” and “does not signal an intention to approve listing standards for virtual asset securities.”
Despite this regulatory stance, Kim Jun-woo, CEO of CrossAngle, suggested introducing a spot Bitcoin ETF, citing low volatility.
He noted, “In a situation where the legal basis for regulation has disappeared, the only difference is whether to do it preemptively or reluctantly follow along.”