South Korea’s Financial Supervisory Service (FSS) has blocked the launch of Bitcoin spot and futures ETFs, as well as funds investing in cryptocurrency-related companies like Coinbase.
Despite the growing global acceptance of crypto ETFs, the FSS cites outdated regulations and strict investor protection measures for maintaining its ban. Asset management firms attempting to meet the demand for virtual asset investment products face significant hurdles, as no cryptocurrency-related fund has passed the FSS securities review process.
Legal experts have questioned the validity of these restrictions, arguing that the prohibition of funds tied to companies like Coinbase exceeds the authority granted under the Capital Markets Act. Critics claim the policy lacks proper legislative backing and stems from emergency measures enacted in 2017, which some believe are now outdated. These regulations have drawn criticism for stifling innovation in South Korea’s financial sector, potentially causing the country to fall behind more progressive markets.
Meanwhile, global financial markets continue to expand cryptocurrency ETF offerings. In the U.S., Bitcoin spot and futures ETFs, including options trading, are thriving. Leveraged ETFs tied to cryptocurrency firms such as Coinbase have gained traction, reflecting a maturing global market. Analysts note that these developments highlight growing investor interest and the potential for substantial market growth.
The FSS’s continued opposition has raised concerns about South Korea’s ability to compete in the global financial arena, with many urging the country to reevaluate its policies to foster innovation and align with international trends.
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