The ruling People Power Party in South Korea has decided to indefinitely postpone its proposal to ease cryptocurrency restrictions, which includes lifting the ban on local spot Bitcoin (BTC) exchange-traded funds (ETFs), according to local sources. This reversal of pledges by the party may be due to difficulties in aligning with the government and financial authorities on cryptocurrency policies. Earlier this month, there were reports that the governing party was planning to delay taxing crypto profits and allow domestic institutions to introduce spot Bitcoin ETFs and invest directly in cryptocurrencies. However, the party has since removed virtual assets from its policy priorities and postponed the announcement of its virtual asset pledge indefinitely.
In January, the nation’s financial regulator reiterated its prohibition on financial institutions introducing cryptocurrency ETFs, stating that digital assets do not align with the Capital Markets Act. Currently, local investors face restrictions on investing in spot crypto ETFs, while foreign crypto futures products remain accessible. Despite the recent approval of the spot Bitcoin ETF by the United States Securities and Exchange Commission, South Korea’s Financial Services Commission remains cautious and cites perceived investment risks associated with digital assets.
On the other hand, the opposition Democratic Party, which also made similar promises regarding crypto ETFs, officially announced its crypto campaign promises last week. South Korea’s general election is expected to take place on April 10.
The People Power Party had considered a proposal to delay taxation on virtual assets for two years and allow corporate investments in digital assets. However, this plan was not finalized as a pledge due to inadequate consultation with relevant ministries and concerns about potential substantial losses, particularly regarding corporate involvement in digital assets.
The Financial Supervisory Service (FSS), the primary financial regulator in South Korea, plans to seek guidance from the U.S. SEC regarding spot Bitcoin exchange-traded funds. FSS chief Lee Bok-hyun has outlined a 2024 business plan, which includes visits to key financial markets like New York in the second quarter. The agenda will involve discussions on South Korean financial markets, with a focus on spot Bitcoin ETFs.
South Korea's ruling party reneges on pledge to approve Bitcoin ETF