South Korea’s FSS prohibits Bitcoin ETFs and investments in firms like Coinbase, citing outdated regulations that stifle market growth.
Bitcoin spot and futures ETFs remain unavailable in South Korea as financial authorities uphold strict regulatory controls over cryptocurrency-related investment products.
The Financial Supervisory Service (FSS) has also prohibited ETFs investing in companies linked to virtual assets, including global firms like Coinbase, which has sparked criticism.
South Korea Blocks Bitcoin Spot and Futures ETFs
The FSS has continued its opposition to Bitcoin spot and futures ETFs, rejecting efforts to launch funds associated with firms exposed to cryptocurrencies.
Asset management companies that capitalize on the growing interest in virtual assets have encountered significant obstacles.
A representative from one firm shared, “We were planning to roll out an ETF that would be investing in Coinbase, but the FSS said we can’t for the time being.” The ETF had reportedly been fully designed and awaiting approval, but regulatory roadblocks halted its launch.
Currently, all ETFs in South Korea must pass a securities review by the FSS. However, insiders reveal that no cryptocurrency-related fund has successfully gained approval under the existing regulatory framework.
This strict stance persists even as Bitcoin’s price is predicted to hit $200,000 after reaching a record high of $94,250.
Legal Justification for Restrictions Questioned
The FSS’s restrictions on Bitcoin spot and futures ETFs, along with funds investing in virtual asset companies, have drawn criticism for lacking legal basis.
These measures stem from the “Virtual Currency Emergency Measures” implemented in 2017, which barred financial institutions from engaging in virtual asset businesses.
Legal experts argue that these outdated regulations are overly broad. Jeong Su-ho, a lawyer at Renaissance Law Firm, remarked, “Restricting investments in listed companies such as Coinbase is beyond the jurisdiction of the Capital Markets Act.”
This contrasts sharply with the United States, where the Commodities and Futures Trading Commission (CFTC) recently approved trading options for spot Bitcoin ETFs.
Critics also contend that South Korea’s justification of investor protection is insufficient without explicit legislative support.
Global Markets Embrace Crypto ETFs
While South Korea tightens its restrictions, global markets are advancing in cryptocurrency investment products.
Bitcoin spot and futures ETFs are operational and expanding in the United States. For instance, Nasdaq recently launched options trading for BlackRock’s iShares Bitcoin Trust ETF, offering new opportunities for investors.
Leveraged ETFs linked to cryptocurrency firms, such as Coinbase, have also gained traction in the U.S. A fund of this nature approved in 2022 achieved notable trading volumes.
Financial experts believe these developments signify a maturing global market for cryptocurrency-related financial products.
ETF strategist Todd Sohn stated, “The rapid development of cryptocurrency ETFs globally demonstrates investor demand and the potential for market growth.”
The FSS’s stance on cryptocurrency ETFs and funds tied to virtual asset companies has sparked concerns about South Korea’s global competitiveness.
Critics warn that restrictive policies may cause the country to fall behind more progressive markets like the U.S. and Europe.
