Korean regulators are facing growing pressure to approve cryptocurrency exchange-traded funds (ETFs) following the recent approval of spot Ethereum ETFs by the United States Securities and Exchange Commission (SEC). Local media reports indicate that the SEC’s decision on Ethereum may prompt Seoul’s financial regulators to reconsider their stance on digital assets.
The SEC approved Ethereum ETFs, the second-largest cryptocurrency, on May 24, 2024, after having approved Bitcoin ETFs in January 2024. ETFs allow investors to gain exposure to a basket of securities, and the approval of crypto ETFs represents a significant step towards integrating traditional finance with the digital asset industry.
In contrast, the Korean Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have been more cautious about introducing crypto asset trading in traditional securities markets. The FSC has stated that ETFs must comply with the Capital Markets Act, which requires that ETFs be linked only to traditional underlying assets, including established financial instruments, securities, international currencies, and commodities.
The FSC oversees and regulates financial institutions and markets in South Korea. The South Korean government updated the Virtual Asset Users Protection Act in early February. According to the Korea Times, Xangle, a leading digital currency data provider in Seoul, has criticized the ban on digital assets in traditional securities markets as outdated and in need of revision to reflect the growing importance of digital assets in modern finance.
Jung Eui-jung, head of the Korean Stockholders’ Alliance, emphasized that Seoul should follow the U.S. example and approve Bitcoin and Ethereum ETFs. He warned that continued regulatory hesitation could lead investors to move their funds to U.S. markets, especially as the U.S. progresses towards fully opening its doors to other less-traded cryptocurrencies.
May 2024, Cryptoniteuae
