South Korean FSS Chief requires more crypto regulation before approving Bitcoin ETF.

Financial Supervisory Service No Bitcoin ETFs Will Be Approved in South Korea Until New Crypto Regulations Are Introduced

Tim Alper – Last updated: March 6, 2024 18:30 EST | 3 min read

No Bitcoin ETF will gain approval in South Korea unless the government introduces new crypto rules, the head of the Financial Supervisory Service (FSS) said on March 5.

The FSS chief Lee Bok-hyun this week struck an optimistic note about possible Bitcoin spot exchange-traded fund approval.

But per the media outlet Nocut News, Lee also tempered his claims with several calls for “caution.”

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No Bitcoin ETF If ‘Regulation Isn’t Forthcoming’

Lee was widely reported as claiming on March 5 that he was “one of the regulators who are positive about virtual assets.” He claimed that “there are others who are more wary.”

But Lee also said that certain regulatory conditions still needed to be met before regulators could green-light a crypto-related financial product. He explained:

“To [approve] a Bitcoin spot ETF, we need a system that lets regulators manage and operate virtual assets. Only when this is in place can the [BTC] spot ETF market be opened in South Korea.”

Seoul is under pressure to approve Bitcoin ETFs in line with a landmark move from Washington-based regulators in January.

But in mid-January, anonymous financial investment industry officials said new crypto regulation must wait until the end of next month’s legislative elections.

South Koreans will go to the polls to vote for National Assembly members on April 10.

The Financial Supervisory Service head Lee Bok-hyun speaking in 2023. (Source: MBN News/YouTube)

Crypto Rules ‘Overhaul’ on Its Way?

The same officials stated that a major “overhaul” of crypto law would likely follow the elections.

However, the nature of this legislative change may depend on the makeup of the single-chamber parliament.

President Yoon Seok-yeol’s manifesto promises before his election in 2022 contained a series of pro-crypto industry pledges.

Thus far, he has failed to deliver on many of these – including a revision of the nation’s long-standing ban on domestic cryptoasset issuance.

BTC prices versus the fiat KRW over the past five days. (Source: Google Finance)

Lee, meanwhile, said that regulators were “constrained” by the current legal system, particularly when it comes to Bitcoin ETF approval.

While he stopped short of saying that there would be no Bitcoin ETF green light under his watch, he appeared keen to dampen expectations. Lee said:

“At this stage, we are open to discussing various possibilities. But since there are restrictions under the current Capital Markets Act, we must consider policy direction. We must do so while reviewing whether amendments to legislation are at all possible.”

Next Parliament Will Deal With Crypto Price Manipulation, Says FSS Chief

Lee suggested that further crypto regulations could focus on efforts to stamp out altcoin price manipulation.

Several high-profile altcoin-related court cases have dominated the headlines in recent years.

These range from allegations of coin manipulation at smaller exchanges, as well as large exchanges like Bithumb. Ongoing Terra-related trials are also in the public eye. Lee said:

“There is currently no institutional mechanism to prevent crypto-related price manipulation, theft, or hacking. Once these things are in place and trust in the virtual assets themselves has been established, we can discuss the second round of legislation related to virtual assets. That is when we will see if they can be brought into the financial system.”

Lee concluded that “the next National Assembly” – in other words, the post-election house – would be tasked with creating new crypto regulation.

This would appear to suggest that the FSS will not make any more attempts to police the crypto sector or approve crypto ETFs until late April at the earliest.

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Analysis: Why New Crypto Rules are Crucial for Bitcoin ETF Approval in South Korea 🚀

The recent statement by Lee Bok-hyun, the head of the Financial Supervisory Service (FSS), sheds light on the current landscape of Bitcoin ETFs in South Korea. While there is optimism surrounding the potential approval of Bitcoin spot exchange-traded funds, Lee’s cautious tone emphasizes the need for new crypto rules in order for regulatory authorities to effectively manage and operate virtual assets.

The Importance of Regulation

Regulation plays a crucial role in ensuring the stability and security of the crypto market. By introducing comprehensive rules that address concerns such as price manipulation, theft, and hacking, regulators can establish trust in virtual assets and create a conducive environment for the integration of cryptocurrencies into the financial system. It is evident that the FSS acknowledges the significance of regulation in the approval process of Bitcoin ETFs.

The Roadblocks

Despite the growing pressure to approve Bitcoin ETFs in line with global trends, South Korea faces certain roadblocks that prevent immediate regulatory changes. The current legal system, as mentioned by Lee, imposes restrictions on the approval of such financial products. Amendments to legislation are necessary to provide regulators with more flexibility and clarity. The upcoming legislative elections will also have an impact on the future direction of crypto regulations, as the makeup of the parliament will influence the nature of the “overhaul” of crypto laws.

Future Outlook

Based on the statements made by Lee, it is unlikely that there will be any significant developments in the approval of Bitcoin ETFs until after the elections. The next National Assembly will be tasked with creating new crypto regulation, which will shape the future of the crypto market in South Korea. Investors and enthusiasts should closely monitor the outcomes of the elections and any subsequent legislative changes, as they will have a profound impact on the adoption and acceptance of cryptocurrencies in the country.

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Q&A: Addressing Readers’ Concerns About Bitcoin ETFs in South Korea

Q: Why are Bitcoin ETFs important for the crypto market in South Korea?

Bitcoin ETFs are important because they provide a regulated investment vehicle for individuals and institutions to gain exposure to Bitcoin without having to directly hold the cryptocurrency. It increases accessibility and liquidity in the market and can potentially attract more investors who prefer traditional investment methods.

Q: What are the potential benefits of new crypto rules in South Korea?

New crypto rules can address concerns such as price manipulation, theft, and hacking, which are crucial for building trust in virtual assets. By establishing a robust regulatory framework, South Korea can create a safer environment for investors and facilitate the integration of cryptocurrencies into the mainstream financial system.

Q: How will the legislative elections impact crypto regulations?

The outcome of the legislative elections will shape the future of crypto regulations in South Korea. Different political parties may have different views and priorities regarding the crypto industry. It is important to monitor the policies and promises made by candidates to understand the potential direction of regulatory changes.

Q: When can we expect Bitcoin ETFs to be approved in South Korea?

Based on the statements made by Lee Bok-hyun, it is unlikely that Bitcoin ETFs will be approved until after the upcoming elections. The next National Assembly will be responsible for creating new crypto regulation, and the timeline for approval will depend on the legislative process and the priorities of policymakers.

Q: How should investors approach the South Korean crypto market amid regulatory uncertainties?

Investors should stay informed about regulatory developments and evaluate the potential impact on the market. It is essential to diversify their portfolios and not solely rely on the approval of Bitcoin ETFs as an investment strategy. Careful research and risk management are key in navigating the South Korean crypto market.

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References: 1. No Bitcoin ETF Without Further Crypto Regulation, Says South Korean FSS Chief 2. Struck an optimistic note about possible Bitcoin spot exchange-traded fund approval 3. Nocut News 4. A landmark move from Washington-based regulators in January 5. Said new crypto regulation must wait until the end of next month’s legislative elections 6. No Bitcoin ETF Until New Crypto Rules, Says South Korean FSS Chief 7. No Bitcoin ETF For South Korea Without Further Crypto Rules, Says Finance Watchdog 8. Follow Us on Google News

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