South Korea’s Financial Services Commission (FSC) has announced plans to reevaluate its long-standing ban on Bitcoin and crypto exchange-traded funds (ETFs). This move signals a potential shift in the country’s regulatory approach toward digital assets.
South Korea forms a committee to explore approving #Bitcoin and crypto ETFs. pic.twitter.com/51PaD0m5PX
— TFTC (@TFTC21) October 10, 2024
The FSC's new cryptocurrency committee, formed as part of a broader effort to address the rapidly evolving digital asset market, will review the current restrictions on local spot Bitcoin ETFs.
Since 2018, South Korea has maintained a strict policy preventing institutional investors from trading cryptocurrencies on exchanges. The ban was originally implemented to safeguard market stability and protect investors from the perceived volatility and risks associated with digital assets. However, pressure from both ruling and opposition political parties has intensified, with many legislators pushing for the approval of local spot Bitcoin ETFs.
In addition to the review of ETFs, the FSC will also examine the monopolistic structure of South Korea's crypto exchanges. Currently, Upbit dominates the country’s digital asset trading, handling over 61% of the trade volume. FSC Chair Kim Byung-hwan emphasized the importance of addressing these market dynamics, noting concerns raised about the financial relationship between Upbit and its partner, K-bank. Lawmakers have warned that Upbit's substantial influence over K-bank’s deposits could lead to financial instability if the partnership faces disruption.
As of now, the committee continues its assessment, and the next steps are expected to be announced in the coming months. The outcome will likely shape the future of South Korea’s role in the Bitcoin space and its regulatory framework for cryptocurrencies.
