After the U.S. Bitcoin ETF approval, FSC officials assert that the South Korean cryptocurrency market will remain unchanged.
In contrast to the United States’ regulatory approval of Spot Bitcoin ETFs, the Financial Services Commission (FSC) of South Korea has steadfastly opposed the prohibition of Crypto ETFs.
According to FSC officials, the developments in the United States were not considered substantial within their regulatory framework. Furthermore, they asserted that the licensing of U.S. ETFs would not impact the cryptocurrency regulations in South Korea.
Why Does South Korea Oppose Cryptocurrency ETFs?
Ongoing apprehensions regarding illicit fund outflows, money laundering, and prospective speculative losses were voiced by the South Korean FSC.
According to the officials, these factors influenced their decision to maintain the December 2017 prohibition on financial institutions investing in cryptocurrencies; the restriction would not be relaxed. This would impede the introduction of cryptocurrency exchange-traded funds (ETFs) within the nation.
Spot Bitcoin ETF proposals were reluctantly approved by the U.S. Securities and Exchange Commission (SEC), according to an FSC official. The official reportedly stated, “In response to the court decision, the SEC also reluctantly permitted virtual asset ETFs on a limited basis.”
In the past, the regulatory body proactively sought input from the public until February 13, 2023, to foster inclusiveness in the decision-making process. Their approach to cryptocurrencies will be significantly influenced by the feedback gathered; a comprehensive review is planned for the initial six months of 2024.
In pursuit of its unwavering objective to regulate the cryptocurrency sector, the FSC unveiled recommendations to fortify conscientious methodologies and protect users.
One of the suggestions included a prohibition on the use of credit cards to acquire digital currencies. This development suggested an increased examination of financial instruments linked to the cryptocurrency market.
Furthermore, the FSC has recently advocated for cryptocurrency exchanges to be subject to strict regulations. The agency suggested that to comply, these platforms would be required to store 80% of consumer deposits in cold wallets. In addition, to promote financial prudence, the FSC suggested that customer withdrawals incur fees.
U.S. Reflected South Korea’s Cryptocurrency Regulations?
Recently, the nation implemented two crypto regulatory plans with vigor. The initial one went into effect in 2023, and the subsequent one is scheduled to be executed in July 2024. The objective of each proposal was to institute transparent regulations that would oversee the issuance, listing, and delisting of cryptocurrencies.
Furthermore, a South Korean official reflected on the repercussions of significant crypto market fluctuations in the United States. By forbidding financial institutions from investing in virtual assets, the nation averted a “financial sector collapse,” they clarified.
They claimed that the preceding action by the United States mirrored the circumspect approach taken by South Korea. Furthermore, they emphasized apprehensions regarding the potential impact of institutionalizing crypto investments on the demand foundation of the domestic stock market.
