The governing People Power Party in South Korea has indefinitely shelved its earlier proposals to relax cryptocurrency regulations, steps that would have opened doors to spot Bitcoin exchange-traded funds (ETFs). This decision comes amidst challenges in achieving consensus with government and financial regulators on the direction of cryptocurrency policies. The party’s move away from its prior commitments was highlighted by the local news agency Chosun Biz.
Delays and Political Promises
The People Power Party, under the leadership of Representative Yoon Chang-hyun, had signaled intentions to delay taxation on cryptocurrency profits and had contemplated enabling local institutions to list spot Bitcoin ETFs and permit direct cryptocurrency investments. These initiatives were expected to be part of the party’s election campaign. However, despite scheduling an announcement of their cryptocurrency strategy, the party has now eliminated cryptocurrencies from their policy framework.
The country’s financial authority has upheld its prohibition on financial institutions offering spot crypto ETFs, citing noncompliance with the Capital Market Law’s asset standards. Consequently, South Korean investors remain barred from spot crypto ETFs, although they can access overseas crypto futures products.
The U.S. Securities and Exchange Commission has recently endorsed spot Bitcoin ETFs, but South Korea’s Financial Services Commission maintains a guarded approach, emphasizing investment risks linked to cryptocurrencies.
The opposition Democratic Party has presented similar proposals concerning crypto ETFs and has officially included them in its campaign policies for the upcoming general elections set for April 10th.
Investment and Regulation in Focus
While the People Power Party has contemplated deferring taxes on crypto assets and allowing institutional crypto investments, these considerations did not materialize into concrete policies due to a lack of detailed discussions with concerned ministries and worries about sizable losses from institutional crypto engagement.
South Korea’s Financial Supervisory Service plans to consult the U.S. Securities and Exchange Commission on spot Bitcoin ETFs guidance. The FSS Chairman, Lee Bok-Hyun, has outlined a 2024 business agenda that features trips to key financial hubs, including New York, where discussions about South Korea’s market approach to spot Bitcoin ETFs will be a priority.