As a seasoned crypto investor with roots deeply embedded in the dynamic world of digital assets, I find the recent developments in South Korea’s crypto landscape to be nothing short of intriguing.
Financial authorities in South Korea may be considering the removal of the current prohibition on directly traded cryptocurrency exchange-traded funds (ETFs). If this happens, it would potentially broaden the opportunities for South Korean investors to invest in the digital asset market.
Based on news from local sources, it appears that the Financial Services Commission (FSC) is considering whether to approve exchange-traded funds (ETFs) based on cryptocurrencies, a move that could position South Korea among an expanding group of nations allowing such investment options.
A Change of Heart
During their yearly review meeting held on Thursday, the market regulatory body unveiled their decision, indicating that the examination of this matter would now be handled by a freshly established cryptocurrency advisory panel within the Financial Supervision Commission.
The team has been assigned to evaluate digital asset policies and hold conversations about relevant topics. Their examination could possibly influence the nation’s conservative approach towards investments, such as spot crypto ETFs.
In response to the U.S. Securities and Exchange Commission’s (SEC) approval of Bitcoin spot ETFs in January 2024, the Korea Institute of Finance (KIF) voiced apprehensions, cautioning that integrating such financial instruments into South Korea’s economic system might entail substantial risks.
In a warning, the Knowledge and Innovation Foundation highlighted the risk that introducing exchange-traded funds focused on specific stocks might shift investors’ attention away from conventional sectors, leading to diversion of resources, and possibly hindering their advancement and development.
Beyond examining crypto ETFs, South Korea intends to explore the possibility of establishing institutional cryptocurrency accounts for businesses. The Financial Services Commission has already set up the Virtual Asset Protection Foundation in September to manage this matter. This organization will also oversee the recovery of customers’ assets from failed crypto exchanges and those experiencing financial difficulties, ensuring their safe return.
South Korea to Investigate Upbit
Additionally, it has been revealed that the Financial Services Commission (FSC) intends to scrutinize the market-controlling influence of South Korean digital asset exchanges, particularly zeroing in on Upbit, the nation’s premier digital currency trading platform.
Among the five licensed cryptocurrency exchanges in South Korea, Upbit is prominent, executing approximately $1.17 billion in transactions daily, representing over 61% of the country’s total trading volume. As reported by CoinMarketCap, its market share peaked at an astounding 80% in March.
At the auditing meeting, Representative Lee Kang-il voiced apprehensions regarding the close business ties between the company and its banking associate, K-bank, as it prepares for a stock market debut (Initial Public Offering – IPO).
K-bank’s dependency on Upbit might pose a threat to their Initial Public Offering (IPO), as the Financial Services Commission (FSC) will examine how much control Upbit has over the cryptocurrency market in South Korea. The aim is to foster a level playing field and competitive environment within the Korean crypto market.
In South Korea, cryptocurrency exchanges must legally collaborate with banks for managing user deposits. Lee highlighted that 20% of K-bank’s overall deposits are linked to Upbit, indicating that any issues in their partnership could potentially cause financial instability and even the possibility of a bank run.
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2024-10-10 15:16