South Korea’s Regulator Holds Strong Position Against Approval of Cryptocurrency ETFs
While the United States has finally given the green light to Bitcoin exchange-traded funds (ETFs) after a ten-year wait, South Korea remains steadfast in its ban on BTC ETFs.
The Financial Services Commission (FSC) of South Korea has stated that the launch of virtual currency ETFs is “impossible” and that there will be no changes to this stance. Presently, the country prohibits banks and financial institutions from buying and owning cryptocurrencies. The FSC has cited concerns over the illegal outflow of domestic funds due to credit card payments on foreign crypto exchanges as the reason behind the ban.
The nationwide prohibition comes after a recent investigation by the Anti-Corruption and Civil Rights Commission, which revealed significant crypto trading activities among South Korean lawmakers.
According to a regional news report, an FSC official commented that the ban is aimed at “stabilizing” the financial markets.
“The government has consistently upheld the principle of prohibiting financial institutions from investing in virtual assets to stabilize the financial market and protect investors. There are no exceptions,” the official stated.
Furthermore, the official pointed out that several jurisdictions, such as the United States, Hong Kong, and Germany, have already launched crypto futures ETFs or spot ETFs.
“It is difficult to consider this as a new incident. From a legal standpoint, it is impossible to launch a virtual asset ETF,” the official added.
Additionally, Article 4 of South Korea’s Capital Markets Act only allows financial investment products, currencies, and general products as underlying assets for ETFs.
In a significant move, the US Securities and Exchange Commission (SEC) recently approved the listing and trading of several spot Bitcoin ETFs, enabling many new investors to enter the crypto market.
Addressing this development, the South Korean FSC official noted that the financial sector in the US did not collapse when the crypto industry experienced a downturn because it had prohibited banks and financial institutions from investing in virtual assets, just like South Korea.
“The SEC reluctantly allowed virtual asset ETFs on a limited basis in response to a court decision. If investment in virtual assets is accepted, it may actually weaken the demand for the domestic stock market,” the official stated.
Although cryptocurrency ETFs continue to gain traction in various parts of the world, South Korea remains resolute in its stance against their approval, citing market stability and investor protection as its primary concerns.