The pressure on South Korean financial authorities to authorize cryptocurrency exchange-traded funds (ETFs) is reportedly intensifying. This pressure stems from the recent approval of spot Ether (ETH) ETFs by the United States Securities and Exchange Commission (SEC).
On May 24, 2024, the SEC gave the green light to create ETFs for Ethereum, marking a significant step in incorporating digital assets into traditional finance. This decision follows closely after the SEC's earlier approval of Bitcoin ETFs in January 2024.
However, the South Korean Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have been cautious about introducing crypto asset trading to traditional securities markets. The FSC insists that ETFs comply with the Capital Markets Act, which restricts them to traditional assets. These regulations intend to ensure the stability and reliability of financial derivatives.
Jung Eui-jung, head of the Korean Stockholder's Alliance, urged South Korea to follow the US's lead in approving Bitcoin and Ethereum ETFs. He warned that continued reluctance could drive investors to move their funds to US markets. Similarly, on-chain data provider Xangle criticized the ban on digital assets in traditional securities markets. The firm advocated for updated regulations to reflect the increasing significance of digital assets in the financial industry.
Earlier this year, the South Korean government updated the Virtual Asset Users Protection Act, signaling acknowledgment of the evolving digital asset landscape. Nonetheless, regulatory bodies like the FSC remain cautious, adhering strictly to existing laws.
As the global financial environment shifts, South Korean regulators are under mounting pressure to adapt their policies to keep pace with international developments in digital asset regulation. The SEC's recent approval of Ethereum ETFs may catalyze change in the South Korean approach to cryptocurrency ETFs.
