In response to the SEC’s approval of spot Bitcoin ETFs in the United States, the Office of the President of the Republic of Korea has urged the country’s Financial Services Commission (FSC) to reconsider its stance on crypto ETFs.
It appears that the South Korean government is divided on the issue of spot Bitcoin ETFs, with the FSC and the Office of the President taking different positions. The FSC’s warning against trading U.S.-based spot Bitcoin ETFs likely stemmed from concerns about the lack of regulation and oversight in the U.S. crypto market. On the other hand, the Office of the President seems more open to reconsidering the FSC’s stance.
According to the report from Maekyung on Jan.18, the Office of the President of the Republic of Korea is urging the FSC to avoid a black-and-white, “do” or “not” directive regarding ETFs and instead focus on creating a legal framework for the regulation of ETFs in South Korea.
In a rough translation, Tae-yoon Sung, head of the presidential policy office, said:
“We are trying to make appropriate changes to the legal system of our country or to consider whether what happens abroad can be accepted in our country.”
Looking beyond the risks associated with trading ETF assets, South Korea is assessing other low-risk aspects of the offering, said Sung.
The FSC’s Jan. 12 press release highlights the potential legal issues associated with trading or brokering overseas-listed spot Bitcoin ETFs, as this could violate the Capital Markets Act. The FSC seems concerned that such activities could undermine the financial innovation and fair competition sought by the Capital Markets Act.
Additionally, while the FSC’s press release raised concerns about the potential legal issues associated with trading or brokering overseas-listed spot Bitcoin ETFs, it also acknowledged that the crypto regulatory regime in South Korea is still evolving, and it will continue to review the regulations as the crypto market evolves globally.
In addition to the FSC’s stance on spot Bitcoin ETFs, South Korea’s Financial Intelligence Unit (FIU) is reportedly working on new regulations for digital asset mixing services, which are used to anonymize crypto transactions.
According to a local report on Jan.15, it appears that the FIU’s discussions on new regulations for digital asset mixing services were prompted by the U.S. sanctions against crypto mixers.
Similarly, while the FIU is considering new regulations for digital asset mixing services, the official reportedly stated that it’s too early to say when a decision will be made on such a move.
Cryptocurrency mixing services are designed to increase the privacy and anonymity of users by obscuring the links between transactions.
The FIU’s efforts to counter money laundering via mixing services align with its broader mission to protect the financial system from illegal activities.
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