South Korea’s Financial Services Commission (FSC) is set to reassess its ban on local spot cryptocurrency exchange-traded funds (ETFs) and institutional accounts on crypto exchanges, signaling a possible shift in the country’s strict stance on exposure to digital assets in traditional financial markets.
South Korea to Consider Lifting Ban on Spot Crypto ETFs
The move, reported by local outlet News1, comes as the FSC’s newly established cryptocurrency advisory committee is reviewing current restrictions.
The FSC’s decision marks a significant shift from its previous strict stance, which reaffirmed a ban on domestic crypto ETFs even after the US approved spot Bitcoin ETFs earlier this year.
The ban was initially justified as a necessary measure to protect South Korea's financial markets from potential volatility caused by cryptocurrency assets.
However, increasing political pressure may have influenced the FSC’s reassessment, with both the ruling Democratic Party and opposition parties vowing to push for approval of local spot Bitcoin ETFs during the general election campaigns.
In May, the newly elected left party formally requested the FSC to review the ETF ban.
Since 2018, institutional investors in South Korea have been effectively banned from opening cryptocurrency trading accounts on exchanges due to strict regulations by the FSC.
*This is not investment advice.