South Korea Defies Trend: Rejects Crypto ETFs despite SEC's Approval

<p>Despite the recent approval of spot Bitcoin
exchange-traded funds (ETFs) by the US Securities and Exchange Commission
(SEC), the South Korean Financial Services Commission (FSC) has stated that it
would not permit the trading of cryptocurrencies on its local financial market.
</p><p>This decision, detailed in a press release yesterday
(Thursday), sends a clear message that South Korea is cautious about the crypto market. The FSC's stance centers around the potential
contradiction between domestic securities firms brokering overseas-listed <a href="https://www.financemagnates.com/tag/bitcoin-etf/" target="_blank" rel="follow">spot Bitcoin ETFs</a> and the South Korean government's position on virtual assets. </p><p>FSC's Stance on Listing and Trading Crypto</p><p>The FSC emphasized that such brokerage may violate
the Capital Market Act, raising concerns about aligning these activities with
the nation's regulatory framework.</p><p>With no legal basis recognizing virtual assets as
basic assets, the FSC deems it challenging to allow the listing and indirect
trading of crypto ETFs through securities firms. Despite the current stance, the FSC has hinted at
possible future developments. Additional reviews will be conducted as South Korea approaches enforcing a new law on virtual assets in July.</p><p>Recently, the FSC proposed a <a href="https://www.financemagnates.com/cryptocurrency/south-korea-seeks-ban-on-crypto-purchases-using-credit-cards/" target="_blank" rel="follow">ban on crypto purchases using cryptocurrencies</a>. This move addresses the FSC's
concerns regarding the illegal outflow of domestic funds facilitated through card
<a href="https://www.financemagnates.com/terms/p/payments/" rel="follow">payments</a> on overseas virtual asset exchanges.</p><p>The regulator's notice highlights the risks
associated with card transactions on virtual asset platforms, including money
laundering and speculative activities. </p><p>The proposed ban is part of a broader strategy to
establish a cooperative foundation with international brands, preventing
foreign currency outflow and strengthening measures against <a href="https://www.financemagnates.com/terms/m/money-laundering/" rel="follow">money laundering</a>,
<a href="https://www.financemagnates.com/" target="_blank" rel="follow">Finance Magnates</a> reported. </p><p>South Korea's Crypto Landscape</p><p>As the proposal awaits public feedback until
February 13, it marks a crucial step in the regulatory landscape of South
Korea's crypto market. The ban, if approved, is anticipated to come into effect
by the end of the first half of 2024, subject to a thorough review and
resolution process.</p><p>South Korea, renowned for its high crypto adoption
rate, is grappling with the challenges posed by the increasing popularity of
digital assets. This regulatory move follows the country's previous mandate for
the identification verification of users on local cryptocurrency exchanges.</p><p>Recently, <a href="https://www.financemagnates.com/cryptocurrency/sec-approves-11-bitcoin-etfs-listing-and-trading-will-start-today/" target="_blank" rel="follow">the SEC approved 11 Bitcoin ETFs</a>. This historic decision paved the way for spot Bitcoin ETFs to be listed on major US stock exchanges. Following the approval, the SEC's Chairman Gary Gensler clarified the scope of this authorization, emphasizing that it pertains specifically to exchange-traded products (ETPs) holding one non-security commodity, Bitcoin.</p>

This article was written by Jared Kirui at www.financemagnates.com.