Stating this in its latest report, South Korea’s financial research institution revealed the effects of the spot crypto exchange-traded funds, noting that the nation is in for more turmoil than gains.
“Allowing [such] products can lead to side effects such as increased inefficiency in resource allocation, increased exposure to crypto-related risks in the financial market, and weakened financial stability,” Korea Institute of Finance said in a Sunday report.
The local think tank mentioned that negative externalities can accrue within the context of the cryptographic market to intercept a huge volume of cash flows for the local financial market which in other words can mean relatively smaller amount of funding for the local industries. KIF further stated that this could make the local financial market to be easily affected by shrinkage in the crypto market hence affecting the confidence of investors in the market and the regulators.
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Even for the present stage of its development, the authors of the document stated that the introduction would only harm. However, the think tank understood that crypto ETFs would become a good store of value provided the underlining crypto currencies to evolve to being more identified and differentiated fiduciary asset classes.
Currently, the South Korean regulators do not permit the launching or trading of the spot crypto ETFs on the grounds that bitcoin and other cryptos cannot be used as the underlying assets of the ETFs.
Nevertheless, South Korea’s ruling left-wing Democratic Party has recently introduced a plan which would allow spot crypto ETFs to be sold in the country, as a part of the promissory upon the last general election.
Domestically, the U.S, got to launch its first spot crypto ETFs in January. The 11 spot bitcoin funds that have emerged in the U. S have however grown to $55. 55 billion in total net associating and they have surpassed the pre-launch expectation. Hong Kong has also launched spot ETFs for bitcoin and ether in April and Australia’s largest stock exchange ASX has listed its first spot bitcoin ETF this week.
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