The approval of Ethereum ETFs by the U.S. Securities and Exchange Commission last week has put pressure on financial regulators in South Korea to give the green light to similar cryptocurrency-listed funds.
The approval of Ethereum ETFs last week marked a dramatic reversal in the US market. Until then, most market participants had expected the rejection of these ETFs, at least in May.
“TheKorea Times reported Monday that the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) are hesitating to allow crypto assets to be traded on the traditional securities market.
The FSC cited the Capital Markets Act to justify its skepticism toward cryptocurrency ETFs. The law limits ETFs to underlying assets, which are traditionally real financial assets or securities, such as international currencies or commodities.
Jung Eui-jung, head of the Korean Shareholders Alliance, has reportedly urged authorities to follow the United States’ lead and approve ETFs for Bitcoin and Ethereum. He believes this step is crucial to prevent investors – in both traditional finance and digital assets – from leaving Korea.
“Who would want to invest their money in a market that is lagging behind a rapidly changing regulatory environment?” said Jung.
Korean investors deprived of the opportunity to
South Korean cryptocurrency investors are currently unable to trade Bitcoin and Ethereum ETFs. In addition, financial authorities in January abandoned any hope of regulations allowing the sale of Bitcoin futures ETFs in the near future.
In March, Lee Bok-hyun, governor of the Financial Supervisory Service, confirmed the internal debate on virtual assets. While he is personally positive, others at the agency are expressing more caution, he added. Lee stressed the importance of considering all points of view and having open discussions before moving forward.
“Among authorities, I am among those who are positive about virtual assets, while there are those who are cautious, and we need to hear their opinions as well. We are having internal discussions on this,” he said.
Korean parties fight for cryptocurrency voters
South Korea’s strong cryptocurrency market has taken center stage in the run-up to the country’s April general election. Both major political parties saw an opportunity to lure voters with cryptocurrency promises.
President Yoon Suk Yeol ‘s People’s Power Party has recognized the growing influence of the cryptocurrency industry and pledged to delay the implementation of a tax on digital assets, a move that is likely to reverberate among cryptocurrency investors.
In contrast, the opposition Democratic Party focused on loosening restrictions on ETFs, including those that would allow investment in U.S. bitcoin products. The strategy was aimed at attracting voters seeking easier access to cryptocurrency investments.
