Increased pressure on Korean regulators to accept cryptocurrency exchange-traded funds (ETFs) stems from the US Securities and Exchange Commission’s recent approval of spot Ethereum ETFs (SEC). Local media report that Seoul’s financial regulators will likely face pressure to reevaluate their position on digital assets as a result of the SEC’s Ethereum judgment.Following the SEC’s January 2024 approval of Bitcoin ETFs, the agency on May 24, 2024 authorized the formation of ETFs for Ethereum, the second-largest cryptocurrency globally.
Investors can increase their exposure to a variety of securities by purchasing exchange-traded funds (ETFs). An important first step toward closing the divide between traditional finance and the digital asset market is the approval of crypto ETFs. The Korean Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have been hesitant to allow crypto asset trading on conventional securities markets, in contrast to their American equivalents.
The Capital Markets Act mandates that ETFs can only be connected to conventional underlying assets, and the FSC claims that this requirement must be closely followed.Financial derivatives are based on these assets, which also include securities, commodities, foreign currencies, and well-established financial instruments. The government organization in charge of monitoring and controlling South Korea’s financial markets and institutions is called the Financial Services Commission. Early in February, the Virtual Asset Users Protection Act received an upgrade from the South Korean government.
According to a report by the Korea Times, Xangle, a leading digital currency data provider based in Seoul, has spoken out against the ban on digital assets in the traditional securities market, describing it as ‘outdated’ and needing revision to accommodate the growing significance of digital assets in modern finance.
“Under the circumstances, the SEC’s Thursday decision on Ethereum is anticipated to press Seoul’s financial regulators to reconsider its regulations against digital assets.”
The leader of the Korean Stockholders’ Alliance, Jung Eui-jung, emphasized the significance of Seoul adopting Bitcoin and Ethereum ETFs in line with the United States, as the current hesitation is producing annoyance that goes beyond the cryptocurrency industry. It will be a “matter of time for the U.S. to fully open the door for other less-traded cryptocurrencies,” according to Jung, who issued a warning to investors that they may move their money to U.S. markets if Seoul regulators fail to make significant headway while the U.S. does.