The Democratic Party of Korea plans to ask the Financial Services Commission (FSC) to review its interpretation of the legal status of spot Bitcoin (BTC) exchange-traded funds (ETFs), as reported by a local press outlet. The party had promised to allow spot ETFs with virtual assets as part of its campaign. A representative from the Democratic Party policy committee stated that the request would be made after the National Assembly opens in June. The opposition party gained power in the South Korean elections in April and currently holds 175 out of 300 seats in the legislative body.
On January 12, the FSC released a statement stating that domestic securities firms could potentially violate the Capital Markets Act by listing foreign spot BTC ETFs. This position was met with criticism, and the previous administration urged the FSC to reconsider its decision on January 18. The prevailing interpretation of the Capital Markets Act does not include virtual assets as underlying assets. The official quoted in the article stated that amending the act would be a lengthy process, taking months at best. Furthermore, discussions regarding the second stage of the 2020 Virtual Asset Business Rights Act will begin in the second half of the year.
In April, Hong Kong began trading spot BTC and Ether (ETH) ETFs, raising hopes for a similar market in South Korea, despite the modest performance of the Hong Kong ETFs. Since the passage of the 2020 act, South Korean regulators have been tightening their control over the crypto market. Tougher sentences for crypto-related crimes have been implemented, and new guidelines for cryptocurrency exchanges have been issued. South Korea’s crypto universe has been described as unique and amazing.