South Korea Maintains Ban on Bitcoin ETFs
Contrary to the United States’ recent approval of Bitcoin spot ETFs, South Korea has decided to uphold its ban on cryptocurrency ETFs and all cryptocurrencies. This means that local financial institutions in South Korea are still unable to purchase or hold crypto.
South Korea Stands Firm on Crypto Ban
Despite the United States’ decision to officially approve Bitcoin spot ETFs, South Korea’s Financial Services Commission (FSC) has reiterated its ban on cryptocurrencies and announced that it will continue enforcing its regulations.
The FSC official stated that the recent approval in the US will have no impact on South Korea’s current restrictions. Local financial institutions in South Korea are prohibited from owning cryptocurrencies and investing in companies that offer crypto, including exchange-traded funds.
Protecting Market Stability: South Korea’s Reason for the Ban
The ban on Bitcoin and crypto ETFs in South Korea is driven by the aim of maintaining financial market stability and protecting investors. The country’s capital markets law restricts investment contract securities, such as ETFs, to traditional financial instruments, ordinary currencies, and commodities, excluding cryptocurrencies.
In January 2024, the FSC also proposed a ban on using credit cards to purchase crypto in an effort to limit access to foreign exchanges. The goal is to prevent illegal outflows of national funds, money laundering, and speculative behavior among South Korean traders.
US Approval Marks the End of a Decade-Long Struggle
The United States Securities and Exchange Commission (SEC) has finally approved 11 applications for Bitcoin spot ETFs after years of anticipation. This decision allows investors in the US to gain exposure to the price of Bitcoin without the complexities of ownership or self-custody.
Investors can now purchase ETF shares with Bitcoin as the underlying asset. This approval marks the end of a decade-long struggle, starting with the Winklevoss brothers’ unsuccessful attempt to launch the Winklevoss Bitcoin Trust in 2013. The SEC’s concerns about market manipulation and fraud have been overcome following the success of Grayscale in court, which led to the conversion of the Grayscale Bitcoin Trust ($GBTC) into a Bitcoin ETF.
Hot Take: South Korea Maintains Ban on Bitcoin ETFs Despite US Approval
South Korea has made it clear that it will not be following in the footsteps of the United States when it comes to Bitcoin ETFs. While the US has officially approved Bitcoin spot ETFs, South Korea continues to enforce its ban on crypto. The country’s aim is to protect market stability and safeguard investors by restricting financial institutions from owning cryptocurrencies and investing in crypto-related companies.
This decision contrasts with the recent regulatory change in the US, which allows investors to directly access the price of Bitcoin through ETF shares. South Korea’s stance highlights its concerns about potential risks such as money laundering and speculative behavior. As cryptocurrency regulations vary across different countries, it remains to be seen how this divergence will impact the global crypto market.
By
By
By
By