As a seasoned financial analyst with over two decades of experience in global markets, I’ve witnessed the evolution of various asset classes and their regulatory frameworks. The recent move by the Korean Financial Services Commission to form a special virtual asset committee has caught my attention, as it could potentially open up new opportunities for Bitcoin investors in Korea.
In simpler terms, a local financial regulatory body in South Korea, known as the Korean Financial Services Commission, has established a special committee focused on virtual assets. This committee could potentially set up the legal groundwork for the introduction of a Bitcoin Spot Exchange Traded Fund (ETF) within the country. Ki Young Ju, CEO and co-founder of CryptoQuant, discusses why this development is favorable for Bitcoin – and offers insights into future developments regarding the “Kimchi Premium” indicator for Bitcoin’s price.
Bitcoin Korean Premium might vanish, here’s why
The gap between Bitcoin’s price on Binance (BNB) and Korean exchanges, known as the Bitcoin Korean Premium Index, could potentially decrease in the near future. It is speculated that a local regulatory body has established a team that could be moving towards approving Bitcoin Spot ETFs and allowing businesses to have crypto accounts, as suggested by CryptoQuant’s CEO Ki Young Ju.
The Financial Services Commission of South Korea (Financial Supervisory Service) has established a virtual asset committee to consider the approval of Bitcoin spot ETFs and enabling corporate accounts for cryptocurrency exchanges.
— Ki Young Ju (@ki_young_ju) October 10, 2024
Making such a decision by a domestic regulatory body could potentially attract investment towards the nation’s cryptocurrency sector. According to the CEO of CryptoQuant, this may lead to an increase in the presence of arbitrage funds and market makers within the Korean market.
In the graph, we can see that the Bitcoin Korean Premium Index currently stands at its minimum point. Previously, a significant increase in this index occurred during the Bitcoin (BTC) surge in the first quarter of 2024.
The Bitcoin Korean Premium Index is frequently seen as a measure of how much local investors, who wish to increase their Bitcoin holdings, can afford or are willing to pay above international market rates.
It is tracked together with Coinbase Premium, which mirrors similar processes on American markets based on Coinbase’s BTC/USD pair performance.
Bitcoin spot ETFs: Another chapter saga?
Currently, Upbit, BitHumb, and Korbit stand out as significant platforms within the local market, providing trading opportunities for Bitcoin (BTC) paired with the Korean Won (KRW) as a fiat currency.
A possible launch of Bitcoin ETFs based on the Spot market in South Korea could significantly impact the entire crypto market landscape. Remarkably, the U.S. took the lead by introducing such investment vehicles for investors back in January 2024, following lengthy legal hurdles.
In April 2024, approval for a similar product was granted in Hong Kong, whereas in July, the United States gave the go-ahead for Ethereum Exchange Traded Funds (ETFs). Yet, only U.S. Spot Bitcoin ETFs succeeded in drawing adequate liquidity.
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2024-10-10 16:51