Embracing Bitcoin? South Korea and India Take Hard Stance: Cryptocurrency ETFs Unlikely to Launch Legally
Despite the approval of multiple Bitcoin spot ETFs by the United States yesterday, financial regulatory authorities in South Korea and the Reserve Bank of India still hold a negative view on this matter. They have expressed that they will not follow the financial product decisions of other countries and are unlikely to introduce cryptocurrency ETFs, emphasizing that cryptocurrencies may pose significant risks to emerging economies.
A total of 11 Bitcoin spot ETFs' management fees overview, expected to raise $4 billion in funds on the first day
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South Korean Financial Regulator Sticks to Its Stance
Following the approval by the U.S. Securities and Exchange Commission (SEC) yesterday of Bitcoin spot ETFs for listing and trading on various exchanges, securities firms and trading institutions have successively listed the product. However, there still seem to be voices of opposition or skepticism.
According to a report by South Korean newspaper Kyunghyang Shinmun, South Korea's policy on crypto assets does not seem likely to change due to this development. The Financial Services Commission (FSC) of South Korea was interviewed for comments and opinions on the matter:
The government has been adhering to the principle of prohibiting financial institutions from investing in cryptocurrencies in order to maintain financial market stability and protect investors.
It was also stated that "there are currently no plans to change the policy, nor have there been any reviews of financial products related to crypto assets."
South Korea Passes the Virtual Asset Protection Act! Local Exchange Association Implements Crypto Asset Alert System
Furthermore, South Korean authorities pointed out that emergency measures related to crypto assets were enacted in December 2017, prohibiting local financial institutions from investing in crypto assets through holding, purchasing, or guaranteeing.
Additionally, in Article 4 of the Capital Markets Act, only financial investment products, legal tender, and general commodities are listed as the underlying assets for ETFs:
In other words, from a legal perspective, issuing crypto ETFs is impossible.
South Korean Authorities: Gensler Reluctantly Approves Bitcoin Spot ETF
Interestingly, the South Korean Financial Services Commission also cited a statement from SEC Chairman Gary Gensler, claiming that Gensler approved the Bitcoin spot ETF under pressure from various parties. It was emphasized that this decision only applies to Bitcoin spot index products ETP and does not constitute approval or endorsement of crypto assets:
Allowing investments in cryptocurrencies could potentially weaken domestic stock market demand.
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Previously, the Financial Supervisory Service of South Korea also indicated that they would visit the U.S. this month to discuss and formulate definitions and determinations of securities with the SEC.
Indian Central Bank: Emerging Markets Cannot Bear Crypto Frenzy and Potential Bubble
On the other hand, the Reserve Bank of India (RBI) also holds a contrary stance. RBI Governor Shaktikanta Das stated at a financial sector seminar on Thursday that the position of Indian regulatory authorities will remain unchanged and expressed concerns about the risks of crypto assets to financial stability:
What is beneficial to another market may not be beneficial to us. Therefore, regardless of what others do, our stance on cryptocurrencies, in line with the RBI, will remain unchanged, and we will not emulate the regulations of other countries.
He likened the situation to the "Tulip Mania" of 1637, emphasizing that emerging markets may not be able to withstand the "crypto frenzy and bubble" that could lead to similar results.
He also reiterated concerns about the lack of inherent value in cryptocurrencies, pointing out that adopting such practices would pose significant risks to emerging market economies, risks that would be very difficult to control in the future.
From the stern warnings issued to several exchanges a few days ago, it is evident that Indian authorities maintain a strict regulatory stance on the crypto industry.
Issued warnings just in December, Indian App Store has already delisted eight exchanges including Binance and Kraken