Despite the recent approval by the US Securities and Exchange Commission (SEC) for several spot Ethereum ETFs, South Korean investors are still waiting for similar opportunities to arise. While the SEC's decision marks a significant step forward in cryptocurrency investment, South Korea, despite its strong interest in digital assets, has yet to see the availability of spot crypto ETFs for its local investors.
South Korea Reports Increasing Cryptocurrency Demand
With a total trade volume of $456 billion, the Korean won surpassed the US dollar's $445 billion in the first quarter of this year to become the most extensively utilized currency in the world for cryptocurrency trading on controlled exchanges.
The Financial Services Commission (FSC), the local regulator for South Korea, voiced concerns that brokering spot crypto ETFs could go against the government's position after Bitcoin-based ETFs were launched in the US earlier this year.
Virtual assets are not officially specified as underlying assets for securities under the Capital Market Act in South Korea.
Fund issuers of spot ETFs, in contrast to futures-based crypto ETFs, are required to maintain custody of the cryptocurrency through agreements with exchanges or other service providers.
Leading the Financial Law Research Center and a senior research fellow at the Korea Capital Market Institute, Kim Kab-lae cautions against enabling the trading of spot cryptocurrency exchange-traded funds (ETFs) in the absence of a legislative change.
In order to enable Korean financial investment companies to introduce competitive products on a global scale, the National Assembly should expedite the law modification process in collaboration with the financial authorities. Korea will lose out on these opportunities if it doesn't.
South Korean Political Parties Agree to Back Crypto
Both of South Korea's major political parties have declared their aim to enact crypto-friendly legislation in an effort to win over the country's ardent cryptocurrency supporters and win votes.
The opposition Democratic Party of Korea wants to allow regional financial institutions to provide spot crypto ETFs, while the ruling People Power Party has promised to give top priority to creating a regulatory framework for virtual assets.
Local regulators are keeping a careful eye on the quickly expanding cryptocurrency industry, despite their strong opposition to spot crypto ETFs.
It has been claimed that the Financial Services Commission (FSC) intends to create a specialized department to manage virtual assets, independent of the Financial Innovation Bureau, which already manages a range of digital finance issues.
The new division's primary focus will be on virtual asset rules that are in line with the July enactment of the Act on the Protection of Virtual Asset Users.
As the battle heats up in the global crypto exchange-traded fund (ETF) market, Hong Kong became the first Asian nation to introduce spot cryptocurrency ETFs in April, joining the likes of Canada, Germany, and Brazil.
It is anticipated that the top exchange in the Asia-Pacific area, Australia, would also accept these funds this year.
June 2024, Cryptoniteuae