On October 11, 2024, South Korea's Financial Services Commission (FSC) announced a review process for its ban on spot cryptocurrency exchange-traded funds (ETFs). This shift follows the establishment of a new cryptocurrency advisory committee aimed at reassessing existing regulations that currently restrict spot crypto ETFs in the country.
According to local reports, the FSC's decision is influenced by ongoing calls for regulatory adjustments. Unlike the U.S., where Bitcoin and Ethereum spot ETFs are actively traded, South Korea has maintained a prohibition on such financial products, alongside restrictions on corporate virtual asset accounts.
The FSC's chair, Kim Byung-hwan, also indicated plans to investigate the monopolistic practices of local exchanges, particularly Upbit, which commands over 50% of the market trading volume. Lawmaker Lee Kang-il raised concerns regarding Upbit's financial ties with K-bank, noting that Upbit's deposits constitute 20% of K-bank's total holdings, which poses potential risks to the bank's stability.
This regulatory review could significantly alter South Korea's digital asset landscape, potentially opening the door for new investment avenues for both institutional and retail investors. The outcome of this review remains uncertain as the FSC evaluates the implications for market stability.