Following the approval of the first spot Bitcoin ETF in the United States, attention has shifted to Asia, particularly South Korea, where local financial institutions are currently prohibited from investing in or holding cryptocurrencies. Despite the US’s move to approve a spot Bitcoin ETF, South Korea’s top financial regulator has indicated there are no plans to allow such investment vehicles.
The South Korean Financial Services Commission has affirmed its stance to maintain the ban on the issuance of crypto-based ETFs, citing financial market stability and investor protection as reasons for the continued restrictions. The country’s capital market law currently limits the scope of underlying assets for investment securities like ETFs to financial investment instruments, currencies, and ordinary commodities, excluding cryptocurrencies.
South Korea does not recognize cryptocurrencies as a financial asset and has banned financial institutions from investing in and holding them since 2017. The country is developing a two-part cryptocurrency regulation, with the first part adopted last year and set to take effect in July 2024. The regulation aims to establish clear rules for the issuance, listing, and delisting of cryptocurrencies.