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27/05/24
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U.S. SEC’s Approval of Spot Ethereum ETFs to Increase Pressure on South Korean Regulators
Local media reports in South Korea show that regulators are being pressured to approve crypto exchange-traded funds (ETFs) after the U.S. Securities and Exchange Commission (SEC) approved spot Ethereum ETFs in recent times.
According to the Korean Times, it is expected that the U.S. SEC’s decision about Ethereum will pressurize financial regulators in South Korea to reconsider their stance on digital assets. The SEC approved BTC ETFs five months ago and approved the creation of Ethereum ETFs a few days ago.
On the other hand, the Financial Supervisory Service (FSS) and Korean Financial Services Commission (FSC) have taken cautious approaches regarding the introduction of cryptocurrency asset trading on securities markets.
The FSC requires ETFs’ strict adherence to the Capital Markets Act, which states that they must be linked to traditional underlying assets, including established financial instruments, securities, global currencies, and commodities, being the basis for financial derivatives.
The FSC oversees and regulates financial institutions as well as financial markets in the country. Three months ago, South Korean authorities released an updated version of the Virtual Asset Users Protection Act to further protect investors. The law does not allow people to use “undisclosed important information” about crypto, market manipulation and illegal trading.
Xangle, a top South Korea-based digital currency data provider, said the ban on digital assets in the traditional securities market is ‘outdated’ and needs to be revised towards accommodating the increasing significance of digital assets in modern finance, according to the Korea Times’ report.
“Under the circumstances, the SEC’s Thursday decision on Ethereum is anticipated to press Seoul’s financial regulators to reconsider its regulations against digital assets,” said Xangle.
South Korea needs to follow the U.S.’s example and approve Bitcoin and Ethereum ETFs, as the current stance is frustrating, said Jung Eui-jung, the head of the Korean Stockholders’ Alliance.
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