The Democratic Party of Korea plans to request a reconsideration of the Financial Services Commission’s (FSC) interpretation of the legal status of spot Bitcoin (BTC) exchange-traded funds (ETFs), as reported by a local press source. The party had promised to allow spot ETFs with virtual assets as part of their campaign. An anonymous official from the Democratic Party policy committee stated that the request would be made after the National Assembly opens in June. The opposition party currently holds 175 out of 300 seats in the legislative body after the April elections in South Korea.
On January 12, the FSC released a statement stating that domestic securities firms could potentially violate the Capital Markets Act if they listed foreign spot BTC ETFs. This position by the South Korean financial regulator was not well-received, and the previous presidential administration urged the FSC to reconsider their decision on January 18. The prevailing interpretation of the Capital Markets Act does not include virtual assets as underlying assets.
The official explained to The Korea Economic Daily that amending the act would be a lengthy process, requiring multiple steps and taking months at best. However, discussions on the second stage of the 2020 Virtual Asset Business Rights Act are expected to begin in the second half of the year.
Despite the modest performance of Hong Kong’s spot BTC and Ether (ETH) ETFs, which began trading on April 30, there is hope for the creation of a similar market in South Korea. Since the passage of the 2020 act, South Korean regulators have been strengthening their control over the crypto market. Tougher sentences for crypto-related crimes have been implemented, and new guidelines for cryptocurrency exchanges have been issued.