As a seasoned crypto investor with roots deeply entrenched in the Asian market, particularly South Korea, this recent development has sparked renewed optimism within me. The potential shift in South Korea’s stance on spot cryptocurrency ETFs is reminiscent of the early days of the internet when dial-up modems were replaced by high-speed broadband connections.
It appears that the highest financial authority in South Korea, known as the Financial Services Commission (FSC), is planning to reassess its decision regarding the prohibition of exchange-traded funds (ETFs) based on spot cryptocurrencies.
After establishing a fresh cryptocurrency advisory team inside the regulatory body, there seems to be a possible change in approach, moving away from their previously firm stance that limited digital asset investments in conventional financial sectors.
The responsibility of the committee lies in reassessing the existing rules which currently disallow the listing of exchange-traded funds based on spot cryptocurrencies within our nation.
Reason For The Review To Unban Crypto ETFs
According to a recent report by local news agency News1, there’s been some movement regarding South Korea potentially lifting the restriction on trading Spot Exchange-Traded Funds (ETFs). In simpler terms, News1’s report suggests that South Korea might be considering to allow the trading of certain types of ETFs.
The Financial Services Commission has expressed plans to reevaluate the approval process for exchange-traded funds (ETFs) based on virtual assets and grant permissions for company virtual asset accounts, via their Virtual Asset Committee.
As a researcher, I’ve noticed that the South Korean regulator has revised its position regarding spot Bitcoin Exchange-Traded Funds (ETFs), following persistent calls for rectification. This is based on information from news reports I’ve been tracking.
In the U.S., Exchange-Traded Funds (ETFs) that focus on Bitcoin and Ethereum can be bought and sold, but such ETFs focused on digital assets remain blocked in South Korea. Moreover, it’s not allowed for corporations to open or transact virtual asset accounts in Korea, and there has been ongoing demand for change in this policy.
As a crypto investor, I’m keeping an eye on the ongoing examination by the Financial Services Commission (FSC) regarding the ban on crypto ETFs. Moreover, it’s interesting to note that the FSC’s chair, Kim Byung-hwan, has signaled their intention to scrutinize the competitive structure of South Korean digital currency exchanges, with a special emphasis on Upbit, which seems to have a significant market presence. This could potentially lead to changes in the current landscape of the cryptocurrency exchange market in South Korea.
Among the five regulated cryptocurrency trading platforms in South Korea, Upbit has a substantial share of the transactional activity, handling over half of the total market’s trades.
The strong influence exhibited by this entity has sparked worries within the legislative and regulatory spheres. In particular, South Korean Democratic Party representative Lee Kang-il has highlighted the significant financial ties between Upbit and its banking partner, K-Bank.
In simple terms, South Korean laws require cryptocurrency platforms like Upbit to keep customer funds securely with partner banks, and K-bank has been instrumental in assisting Upbit’s daily business activities.
Lee pointed out that the deposits at Upbit account for about one fifth of K-bank’s total deposits, which has sparked worries regarding the possible financial risk to K-bank, especially if there’s an interruption in their relationship.
What This Means For The Market
It’s noteworthy that the reassessment of South Korea’s ban on crypto ETFs and the probe into their dominant exchange may result in substantial shifts within their digital asset marketplace.
Lifting the ban on exchange-traded funds (ETFs) dealing directly with cryptos in South Korea could represent a significant change in their regulatory stance towards digital currencies, providing fresh avenues for both institutional and individual investors to explore crypto investments.
As I delve deeper into my analysis, I can’t predict the final verdict just yet, as the regulatory body is still assessing the potential impact on market stability with the measures under consideration.
Featured image created with DALL-E, Chart from TradingView
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2024-10-11 10:15