Yahya 
Korean authorities are under pressure to approve Cryptocurrency ETFs after the SEC green-lit spot Ethereum ETFs recently. According to the local sources, the decision of the SEC may prompt Seoul’s financial regulators to reconsider their position on digital assets.
On 24 May, 2024 the SEC authorized the formation of ETFs for Ethereum – the second largest cryptocurrency in the world after Bitcoin – after having authorized Bitcoin ETFs in January 2024. This is considered a major attempt at harmonizing cryptocurrencies with the conventional financial markets since ETFs give people an opportunity to invest in a number of securities at once.
Current Position of Korean Financial Authorities
Different from the US, the Korean Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have been quite careful in opening up the trading of the crypto assets in the conventional securities markets. In this regard, the FSC has noted that ETFs must be aligned strictly to the Capital Markets Act which requires that the ETFs be associated with standard underlying instruments including recognized financial asset, securities, foreign currencies and commodities.
According to the FSC, a government agency for supervising and monitoring the financial institutions and markets in South Korea, these regulations are aimed at the stability of the financial system. However, this conservative approach is receiving a pushback from stakeholders in the digital asset market.
Calls for Change from Industry Stakeholders
An article by the Korea Times shows that a digital currency data company based in Seoul known as Xangle has bashed the ban on digital assets in traditional securities markets. Xangle said the regulations are “outdated” and urged for updates to reflect the growing role of digital assets in the financial industry. “Under the circumstances, the SEC’s Thursday decision on Ethereum is expected to force Seoul’s financial regulators to rethink their stance against digital assets,” the report concludes.
The leader of the Korean Stockholders’ Alliance, Jung Eui-jung, has also echoed the need for Seoul to emulate the U. S. Jung also pointed out that the current regulatory indecision is giving rise to frustration not just restricted to the crypto industry but the investors may have to move their money to the U. S. markets. He said it will only be a matter of time before the U. S. throws open the door for other less-traded cryptocurrencies.
The recent approval of Ether ETFs by the SEC is a major turning point in the industry, which may set a precedent for other countries’ financial authorities. While pending regulatory decisions continue to put pressure on the authorities of South Korea the fate of Korean ETFs remains uncertain. The industry voices remain to be raised in a bid to see changes in the regulations that would help the country to continue to compete in the new financial system.