Pressure Mounts on Korean Regulators to Approve Cryptocurrency ETFs Following SEC’s Ethereum Decision

Korean Regulators Face Pressure to Approve Cryptocurrency ETFs Following SEC’s Ethereum Decision

The recent approval of spot Ethereum ETFs by the United States Securities and Exchange Commission (SEC) has put Korean regulators under mounting pressure to reconsider their stance on digital assets.

On May 24, 2024, the SEC gave the green light for the creation of ETFs for Ethereum, the world’s second-largest cryptocurrency, following its earlier approval of Bitcoin ETFs in January 2024. This decision is expected to influence Seoul’s financial regulators to reassess their approach to crypto assets.

ETFs are financial instruments that allow investors to gain exposure to a basket of securities, bridging the gap between traditional finance and the digital asset industry. However, the Korean Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have been cautious about introducing crypto asset trading on traditional securities markets.

The FSC has emphasized that ETFs must adhere to the Capital Markets Act, which currently only allows them to be linked to traditional underlying assets such as established financial instruments, securities, international currencies, and commodities.

Xangle, a leading digital currency data provider based in Seoul, has criticized the ban on digital assets in traditional securities markets as ‘outdated’ and in need of revision to accommodate the growing significance of digital assets in modern finance.

Jung Eui-jung, the head of the Korean Stockholders’ Alliance, has urged Seoul to follow the U.S.’s example and approve Bitcoin and Ethereum ETFs. He warned that continued hesitance from Korean regulators could lead investors to shift their funds to U.S. markets, where there is more progress in embracing digital assets.

As the global financial landscape evolves, the pressure is mounting on Korean regulators to adapt to the changing dynamics of the digital asset industry and consider the potential benefits of approving cryptocurrency ETFs.