Bitcoin spot and futures ETFs face continued regulatory hurdles in South Korea, with the Financial Supervisory Service (FSS) maintaining strict control over cryptocurrency-related investment products. The FSS has also barred the launch of ETFs that invest in companies tied to virtual assets, including major global firms such as Coinbase. Despite the increasing demand for virtual assets, asset management companies in South Korea have encountered challenges in launching cryptocurrency-related funds. The regulatory stance of the FSS has prevented the approval and launch of such funds.
As per the current regulations in South Korea, all ETFs must undergo securities review by the FSS. However, industry insiders claim that no cryptocurrency-related fund has received approval to start operations due to the existing policy regime. This decision comes at a time when Bitcoin is predicted to reach $200k after hitting an all-time high of $94,250. Critics have questioned the legal basis for the restrictions imposed by the FSS, accusing the authorities of lacking justification for blocking Bitcoin spot and futures ETFs and funds investing in virtual asset companies. The restrictions were put in place following the “Virtual Currency Emergency Measures” enacted in 2017, which prohibited financial companies from engaging in virtual asset business.
Critics argue that the FSS’s opposition to Bitcoin spot and futures ETFs, as well as funds tied to virtual asset companies, lacks legal backing. They point out that restricting investments in listed companies like Coinbase goes beyond the jurisdiction of the Capital Markets Act. This differs from the U.S. Commodities and Futures Trading Commission’s decision to approve spot Bitcoin ETF options trading, highlighting the contrasting regulatory approaches between countries. While South Korea tightens its restrictions, global financial markets, particularly in the United States, are embracing cryptocurrency-related investment products. Bitcoin spot and futures ETFs are operational in the U.S. and continue to expand, with Nasdaq recently launching options trading for BlackRock’s iShares Bitcoin Trust ETF, providing new investment opportunities for traders.
In the U.S., leveraged ETFs tied to cryptocurrency firms like Coinbase have gained traction, with one fund approved in 2022 recording strong trading volumes. Financial analysts view these developments as indicators of a maturing global market for Bitcoin and related financial products. Todd Sohn, an ETF strategist, highlighted the rapid development of cryptocurrency ETFs globally, showcasing investor demand and the potential for market growth. Critics express concerns about South Korea’s position in the global financial landscape, fearing that the nation’s restrictive policies may leave it lagging behind more progressive markets like the U.S. and Europe. The FSS’s stance on Bitcoin spot and futures ETFs reflects a regulatory approach that could impact South Korea’s competitiveness in the evolving cryptocurrency market.
