The Democratic Party of Korea intends to ask the Financial Services Commission (FSC) to reconsider its interpretation of the legal status of spot Bitcoin (BTC) exchange-traded funds (ETFs), as reported by a local news outlet. The party had promised to allow spot ETFs with virtual assets as part of its campaign. An undisclosed official from the Democratic Party’s policy committee stated that they will make the request to the FSC after the National Assembly opens in June. Following the April elections in South Korea, the opposition party now holds 175 out of 300 seats in the legislative body.
On January 12, the FSC released a statement suggesting that domestic securities firms may breach the Capital Markets Act by listing foreign spot BTC ETFs. However, the United States Securities and Exchange Commission approved spot BTC ETF trading on January 10. The stance taken by the South Korean financial regulator was not well received, and the previous presidential administration urged the FSC to reconsider its decision on January 18.
According to the prevailing interpretation, virtual assets are not considered underlying assets under the Capital Markets Act’s definition. The official informed The Korea Economic Daily that amending the act would be a lengthy process requiring several steps, taking months at best. Additionally, discussions on the second stage of the 2020 Virtual Asset Business Rights Act will commence in the latter half of the year.
Despite the modest performance of Hong Kong’s spot BTC and Ether (ETH) ETFs, which began trading on April 30, there is hope for the creation of a similar market in South Korea. The passage of the 2020 act has led to stricter regulation of the crypto market in South Korea, including harsher sentences for crypto-related crimes and the issuance of new guidelines for cryptocurrency exchanges.
Source: Duke Hong Kong
Magazine: South Korea’s Fascinating and Exceptional Crypto Universe