South Korea to Open Cryptocurrency ETF! Digital Asset Committee Discusses Possibility of Spot ETF, Opening Registration for Institutional Exchange

According to a report by local media, the Financial Services Commission (FSC) of South Korea stated in its recent annual audit report that its digital asset committee will reexamine cryptocurrency spot ETFs and the ban on institutional user registrations. These actions not only reflect the South Korean government's positive stance on digital assets but also fulfill a campaign promise by the ruling Democratic Party.

Digital Asset Committee Reevaluates Spot ETF, Allows Institutions to Open Digital Asset Accounts

Reports indicate that the Financial Services Commission announced on the 10th the establishment of a Digital Asset Committee, a consultative group specifically formed to provide recommendations to the government and industry. The committee will be chaired by the Deputy Chairman of the Financial Services Commission, and will include 9 experts from the Ministry of Planning and Finance, Ministry of Justice, Ministry of Science and ICT, as well as the private sector. The aim is to provide policy recommendations for the digital asset market and corporate operators through parliamentary audit reports.

The highlight of this report is the Korea Financial Services Commission's plan to approve a digital asset spot ETF and allow institutional users to open digital asset accounts. While spot Bitcoin and Ethereum ETFs have been listed in the United States this year, similar ETFs have faced obstacles in Korea. After the approval of a spot Bitcoin ETF in the US in January, Korean regulatory agencies reiterated their decision to maintain the ban on listing domestic cryptocurrency ETFs citing potential risks in the financial market.

Furthermore, current regulations in the country prohibit companies from opening and trading digital asset accounts, and reports indicate that many industry professionals have requested amendments to these regulations.

Consensus on Cryptocurrency Issues, Acceleration of Regulatory Progress in Korea?

The left-leaning ruling party, the Democratic Party of Korea, promised a series of cryptocurrency-friendly election pledges before the election, including requiring the Financial Services Commission to reexamine the listing of digital asset spot ETFs and allowing retail investors to purchase these ETFs through tax-free accounts. They also plan to expand tax benefits for cryptocurrency investors, including raising the tax-free threshold from the current 2.5 million Korean won to 50 million Korean won.

It was also mentioned that since 2018, Korean institutional investors have been prohibited from establishing cryptocurrency trading accounts on exchanges under strict supervision by the Financial Services Commission, a situation expected to change after the Digital Asset Committee gains influence.

Previously, we mentioned that cryptocurrencies are poised to become a bipartisan "purple issue" in US politics. In Korea, a similar situation is observed as not only the ruling Democratic Party, but even the current opposition party, are in the pro-crypto camp. Combining the earlier news about the country planning stablecoin regulatory frameworks, we may see less political resistance to digital asset-related issues in the country and smoother implementation.

Coinbase: Cryptocurrencies become a "purple issue" for both parties in the US, promoting mainstream adoption of cryptocurrencies