The Democratic Party of Korea intends to urge the Financial Services Commission (FSC) to reconsider its interpretation of the legal status of spot Bitcoin (BTC) exchange-traded funds (ETFs), as reported by a local press outlet. The party had made a campaign promise to allow spot ETFs with virtual assets as their underlying. According to an anonymous official from the Democratic Party policy committee who spoke to The Korea Economic Daily, the party plans to make this request after the National Assembly opens in June. The opposition party gained power in South Korea following the April elections and currently holds 175 out of 300 seats in the legislative body.
On January 12, the FSC issued a statement stating that domestic securities firms could potentially violate the Capital Markets Act by listing foreign spot BTC ETFs. This statement was not well-received, and the previous presidential administration urged the FSC to reconsider its decision on January 18. The prevailing interpretation of the Capital Markets Act does not include virtual assets in its definition of an underlying asset. The official informed the newspaper that amending the act would require several steps and could take several months at best. Additionally, discussions on the second stage of the 2020 Virtual Asset Business Rights Act will commence in the second half of the year.
In April, Hong Kong began trading spot BTC and Ether (ETH) exchange-traded funds, which raised hopes for the establishment of a similar market in South Korea, despite the modest performance of Hong Kong ETFs. Since the passing of the 2020 act, South Korean regulators have been tightening their control over the crypto market. Stricter penalties for crypto-related crimes have been implemented in 2024, and new guidelines for cryptocurrency exchanges have been issued.