U.S. Ethereum ETF Approval Puts Pressure on Korean Regulators to Advance Crypto Adoption
Summary:
Following the U.S. SEC's recent approval of Ethereum ETFs, Korean regulators are facing increased pressure to also authorize cryptocurrency ETFs. While the U.S. continues to bridge traditional finance with the digital asset industry, Korean regulators remain cautious, citing the need for ETFs to comply strictly with the Capital Markets Act. However, financial industry stakeholders call for an update to regulations, saying the delay in approval may lead to a shift of Korean investors' interests to U.S. markets.
With the United States Securities and Exchange Commission (SEC) recently giving the nod to spot Ethereum exchange-traded funds (ETFs), regulatory authorities in Korea face increasing demands to follow suit. The SEC's decision to permit Ethereum ETFs is predicted to put significant pressure on Korean financial regulators to revise their perspective on cryptocurrencies. This decision came on May 24, 2024, with the SEC approving the establishment of ETFs for Ethereum, the second most valuable digital currency globally, succeeding its earlier sanction of Bitcoin ETFs in January 2024. ETFs, the financial vehicles that provide investors access to clusters of securities, represent a crucial stride in linking mainstream finance with the cryptocurrency industry. However, their prevention by the Korean Financial Services Commission (FSC) and Financial Supervisory Service (FSS) is a display of caution regarding the integration of cryptocurrency operations into conventional securities markets. As per the FSC, ETFs should strictly comply with the Capital Markets Act, binding them only to traditional underlying assets. These primarily include recognized financial tools, securities, international currencies, and commodities, forming the basis of financial derivatives. The FSC, a government body, oversees and regulates financial institutions and markets in Korea. In the early part of February, the country made a new amendment to its Virtual Asset Users Protection Act. As reported by the Korea Times, Xangle, a top-tier digital currency data company based in Seoul, has expressed its disapproval of the prohibition of digital assets in the traditional securities market, calling it 'outmoded' and in need of updating to reflect the increasingly crucial role digital assets are playing in the modern financial world. The head of the Korean Stockholders’ Alliance, Jung Eui-jung, has emphasized the need for Korea to follow the American example and give approval to Bitcoin and Ethereum ETFs, citing widespread frustration due to the current delay. Jung warned that Korean investors may migrate their funds to US markets if Seoul's regulatory progress continues to lag behind the US, further stating it will only be a matter of time before the US fully opens up the trade of other less popular cryptocurrencies.
Published At
5/25/2024 11:05:44 AM
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