South Korea takes a strong stance on banning cryptocurrency ETFs despite US approval of Bitcoin ETF

The SEC’s approval of the Spot Bitcoin ETF has already impressed investors and many celebrities as it offers many benefits to investors and institutional investors as well. However, these achievements of the cryptocurrency industry do not seem to impress Korean regulators. Korea Financial Services Commission Kyunghyang spoke to a local news channel and said the approval of a spot Bitcoin ETF in the U.S. would not be a big deal for them. Decision to ban cryptocurrency.

Reasons for prohibiting the sale and purchase of cryptocurrency

The main reason for banning cryptocurrencies is that regulators fear it could lead to illegal outflow of domestic funds, encourage money laundering and speculative activities, which could result in losses for investors.

The FSC recently announced plans to take feedback on the government’s proposal phase, which will last until February 13. They will consider this public feedback pivotal, which will be reviewed in the first half of 2024.

As part of its mandate to oversee and regulate the cryptocurrency industry, the Financial Services Commission (FSC) has proposed banning the use of credit cards to purchase digital currencies. In addition to these restrictions, the FSC also proposed rules to protect users of cryptocurrency exchanges.

The rules specify that exchanges must keep at least 80% of customer deposits in cold wallets and charge a fee to customers who withdraw funds from their deposits. These measures are intended to protect investors and encourage responsible practices within the cryptocurrency industry.

Korea’s ongoing strategy

South Korea is in the process of developing two different regulations. The first plan was processed on its own last year, and the second plan is scheduled to come into effect in July 2024. Both plans aim to establish transparent regulations for the issuance and delisting of cryptocurrency.

Domestic financial authorities are taking a firm negative stance toward virtual assets.

“The reason the U.S. financial sector did not collapse when the virtual asset market crashed was because (like Korea) financial institutions were prohibited from investing in virtual assets,” he said. “The SEC also reluctantly allowed virtual asset ETFs on a limited basis.” This is a response to the court ruling. “If investment in virtual assets is recognized, the demand base in the domestic stock market may be weakened.”

financial regulator

In addition to this, Gary Gensler also approved an application for a spot Bitcoin ETF and stated that he has no plans to endorse or support Bitcoin.