- South Korean authorities rule out the possibility of a cryptocurrency ETF in the country.
- The government remains restrictive on cryptocurrencies, and financial institutions are banned from investing in them.
- An official stated that the ban is to stabilize the market and protect investors.
South Korean regulators have doused hopes of a cryptocurrency exchange-traded fund (ETF) launch in the country, according to reports from a local news outlet.
The country’s Financial Service Commission reiterated the government’s restrictive policy on cryptocurrency assets, which are not recognized as financial assets in the region. Furthermore, financial institutions are prohibited from investing in cryptocurrencies, a rule that has remained since 2017.
The continued restrictive stance on crypto comes amidst recent developments in other countries. Yesterday, the U.S. Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETF applications, ending years of waiting.
An official of the South Korean Financial Services Commission was quoted as having said:
The (South Korean) government has consistently maintained the principle of prohibiting financial institutions from investing in virtual assets in order to stabilize the financial market and protect investors. There are no enemies.
Commenting on the SEC approval, which is viewed by many as a watershed moment, the official said the approval is not “a new incident.” According to the official, “The United States previously allowed futures ETFs, and some countries such as Hong Kong, Germany, and Canada are already operating spot ETFs.”
Meanwhile, the official argued that the SEC’s reluctant approval was in response to a court decision. The policy in South Korea is expected to remain so for a while, according to the official. Authorities in the country remain wary of an institutional collapse as a result of virtual asset market uncertainties.
However, crypto market participants in the Asian country argue for an ETF launch. Kim Jun-woo, CEO of a local crypto firm, stated that South Korea should also follow in the U.S. footsteps by launching a Bitcoin ETF. “In a situation where the legal basis for regulation has disappeared, the only difference is whether to do it preemptively or reluctantly follow along,” the executive argued.
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