South Korean Think Tank Warns Against Approval of Spot Crypto ETFs; Calls for Stringent Regulations
Summary:
South Korea's finance-focused think tank warns against the country's approval of spot crypto exchange-traded funds (ETFs), as per researcher Bo-mi Lee. The paper suggests that such a move might destabilize the financial market and lead to resource allocation inefficiencies. The think tank further emphasizes on conducting more research to understanding the potential risks, since they currently believe the losses could outweigh benefits. There is also a stress on robust regulation measures to mitigate potential risks. Parallelly, South Korea imposes stricter rules on crypto exchanges to ensure users safety.
A South Korean think tank specializing in finance and economics is cautioning against the country's endorsement of spot crypto exchange-traded funds (ETFs). Korea Institute of Finance researcher Bo-mi Lee asserted in a paper that experience from other countries has shown that the drawbacks of spot Bitcoin and Ether ETFs surpass their advantages, threatening financial stability. The researcher suggested that if spot crypto ETFs were introduced and subsequently inflated digital asset value, a considerable amount of capital would be injected into the crypto market leading to an imbalance in resource distribution. Lee noted that when prices fall, it could negatively impact the liquidity of financial markets and the stability of financial companies. The researcher insisted that thorough research into potential losses and gains from the possible initiation of spot crypto ETFs is crucial. At present, Lee maintained that the detriments are likely to exceed the possible gains. Despite the high volatility of digital assets and lack of comprehensive understanding of their value, the introduction of these products may mislead market players into considering digital assets as reliable. Thus, increasing risks, Lee stressed on the need for robust regulatory measures to mitigate such risks. Lee also expressed concerns about the unclear effects of digital assets on investors and the financial market, emphasizing on regulators to devise appropriate measures before introducing spot crypto ETFs. Related to this, South Korea is boosting the status of its crypto crime unit. From July 19th, registered crypto exchanges are legally obligated to scrutinize tokens to protect users. The exchanges are required to assess whether the tokens should be supported or delisted. Under this new law, registered exchanges must review each of the 600 listed crypto assets. Exchanges that fail to comply will be subjected to strict consequences that include fines and imprisonment. Other News: Unsettled rumors about crypto in Korea causing distress, Binance airdroppings for BNB holders as reported by Asia Express.
Published At
6/24/2024 11:03:12 AM
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