The ruling People's Power Party in South Korea has decided to put on hold its plans to ease cryptocurrency regulations, which includes lifting the ban on local spot Bitcoin exchange-traded funds (ETFs), as reported by local sources. This decision is seen as a reversal of their earlier pledge and may be attributed to difficulties in aligning their stance with the government and financial authorities on cryptocurrency policies, according to a report by Chosun Biz. Earlier this month, there were reports indicating that the ruling party was considering postponing taxes on cryptocurrency profits and allowing domestic institutions to launch spot Bitcoin ETFs and directly invest in cryptocurrencies. However, the party has now removed virtual assets from its list of policy priorities. Despite initial plans to announce a commitment to virtual assets, the party led by Yoon Chang-hyun has decided to postpone this announcement indefinitely.
The country's financial regulator has also reiterated its stance on banning financial institutions from launching cryptocurrency ETFs, citing concerns about the compatibility of digital assets with the underlying assets stipulated in the Capital Markets Act. Presently, local investors are restricted from investing in spot cryptocurrency ETFs, while foreign cryptocurrency futures products remain accessible.
While the U.S. Securities and Exchange Commission has recently approved a spot Bitcoin ETF, South Korea’s Financial Services Commission remains cautious, expressing concerns about perceived investment risks associated with digital assets. In contrast, the opposition Democratic Party has reportedly committed to a similar plan for a crypto ETF, announcing its campaign pledge officially last week ahead of the upcoming general election on April 10. Reports suggest that the People's Power Party is mulling over a proposal to defer taxes on virtual assets for two years and allow businesses to invest in digital assets. However, this plan has not been finalized due to insufficient consultation with relevant ministries and concerns over potential significant losses, particularly related to corporate involvement in digital assets.
Additionally, Korea’s Financial Supervisory Service (FSS) is seeking guidance from the U.S. SEC regarding spot Bitcoin exchange-traded funds. FSS chief Lee Bok-hyun has outlined the agency's plans for 2024, which include visits to major financial markets like New York in the second quarter, with a particular focus on discussions surrounding spot Bitcoin ETFs and South Korea’s financial markets.
