Governmental Guidance: FSC Urged To Rethink Approach To Spot Bitcoin ETFs By South Korea’s Top Office

Merely a week following the cautionary notice from South Korea’s Financial Services Commission (FSC) discouraging the trading of spot Bitcoin exchange-traded funds (ETFs) based in the United States, the Office of the President is now advocating for a reevaluation of the regulator’s position.

On Jan 18, the Yongsan Presidential Office, officially known as the Office of the President of the Republic of Korea, urged the Financial Services Commission (FSC) to avoid issuing specific affirmative or negative directives concerning Exchange-Traded Funds (ETFs). Tae-yoon Sung, the head of the presidential policy office, conveyed this message in response to a request from the FSC, as reported by the local news outlet Maekyung.

“We aim to implement suitable modifications to our country’s legal system or assess the compatibility of foreign practices within our national context.”

Examining beyond the potential risks linked to trading ETF assets, South Korea is evaluating additional aspects of the offering that carry lower risks, as mentioned by Sung.

On Jan 12, the Financial Services Commission (FSC), a key financial regulatory authority in South Korea, released a concise statement. The press release indicated that South Korean securities firms trading or brokering spot Bitcoin ETFs listed overseas could violate the Capital Markets Act. This legislation promotes financial innovation and ensures fair competition within South Korea’s capital markets.

South Korea’s Contemplates Enforcement Measures Amid Global Developments

Nevertheless, the statement acknowledged that the regulatory framework for cryptocurrency within the nation is in its early phases and would reassess the regulations as they evolve internationally.

Meanwhile, there are reports that the Financial Intelligence Unit (FIU), another regulatory body in South Korea focused on financial matters, is considering implementing fresh regulations about services that involve mixing digital assets.

On Jan 15, as per a recent local report, a representative from FIU disclosed that talks were initiated in Korea following the imposition of sanctions on cryptocurrency mixers by the United States. However, we have not yet anticipated a conclusive decision regarding implementing such enforcement measures.

Cryptocurrency mixing services safeguard investor privacy and minimize traceability by transferring funds across various blockchain networks. Consequently, the Financial Intelligence Unit (FIU) in South Korea is taking measures to combat illicit money laundering activities facilitated by mixer services.

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The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.

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