South Korean financial regulators are currently deliberating the possibility of permitting spot Bitcoin exchange-traded funds (ETFs) within the country. Lee Bok-hyun, the governor of the Financial Supervisory Service (FSS), disclosed ongoing discussions within South Korea’s regulatory circles.
In a recent radio interview, Lee shed light on the considerations surrounding the potential approval of Bitcoin Spot ETFs, noting the varying viewpoints among regulatory stakeholders. While expressing optimism towards virtual assets, Lee acknowledged the more cautious stance adopted by some officials.
The discussions on Bitcoin Spot ETF approval in South Korea coincide with the nation’s efforts to foster technological innovation. However, the decision-making process faces challenges due to divergent opinions within the regulatory community and uncertainties regarding Bitcoin’s classification under existing financial regulations.
Earlier in January, financial authorities indicated a lack of interest in regulating Bitcoin ETFs, but scrutiny intensified following concerns over brokerage sales of these ETFs under the Capital Markets Act.
Lee expects to solicit public input on this issue, particularly with anticipated regulatory developments concerning virtual assets later this year. Additionally, the FSS plans to engage in formal consultations with the United States Securities and Exchange Commission (SEC) in May to discuss advanced financial instruments, including non-fungible tokens (NFTs), and the classification of Bitcoin Spot Exchange-Traded Funds (ETFs) within regulatory frameworks.
This discussion follows the decision of South Korea’s People Power Party to postpone indefinitely its plans to relax cryptocurrency regulations. This postponement has impacted the proposal to lift the ban on domestic spot Bitcoin exchange-traded funds (ETFs), attributed to challenges in achieving consensus among government and financial institutions regarding cryptocurrency policy.
Globally, interest in Bitcoin ETFs has surged, particularly after the U.S. SEC’s approval of the first spot Bitcoin ETFs on Jan. 10. This decision prompted significant investments, with recent data showing substantial inflows into U.S. Spot Bitcoin ETFs. Notable financial institutions such as Fidelity and BlackRock reported inflows exceeding $400 million each, while the Grayscale Bitcoin Trust experienced significant outflows.
Meanwhile, South Korean regulators are intensifying scrutiny of digital platforms due to privacy concerns. On March 4, the Personal Information Protection Commission of South Korea announced an investigation into Worldcoin (WLD) following reports of potential illicit processing of personal information without individuals’ consent, including iris data.