South Korea’s ruling party reneges on its commitment to a Bitcoin ETF election pledge

South Korea’s ruling People Power Party has decided to indefinitely postpone its proposal to relax cryptocurrency restrictions, which included lifting the ban on local spot Bitcoin exchange-traded funds (ETFs), according to local sources. The party’s change in stance is believed to be a result of difficulties in aligning with the government and financial authorities on cryptocurrency policies. The party had previously been working on election promises to delay taxing crypto profits and allow domestic institutions to introduce spot Bitcoin ETFs and invest directly in cryptocurrencies. However, the party has now removed virtual assets from its policy priorities and postponed the announcement of a virtual asset pledge. In January, the country’s financial regulator reiterated its ban on financial institutions introducing cryptocurrency ETFs, citing the lack of alignment with the Capital Markets Act. While local investors face limitations on investing in spot crypto ETFs, foreign crypto futures products remain accessible. The Financial Services Commission of South Korea maintains a cautious stance on digital assets, despite the recent approval of the spot Bitcoin ETF by the US Securities and Exchange Commission. On the other hand, the opposition Democratic Party, which had also made similar promises regarding crypto ETFs, officially announced its crypto campaign promises last week. The country’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, but it was not finalized due to insufficient consultation with relevant ministries and concerns about potential losses. The Financial Supervisory Service of South Korea is planning to seek guidance from the US SEC regarding spot Bitcoin ETFs and has outlined a business plan for 2024, which includes visits to key financial markets such as New York.