Korea Exchange Chairman Advocates for Crypto ETF Approval
The chairman of the Korea Exchange, Jeong Eun-bo, has recently urged for the approval of cryptocurrency exchange-traded funds (ETFs) in South Korea. In light of the ongoing crisis in the stock market, he emphasized the necessity to modernize the nation’s financial framework to boost competitiveness with global markets.
South Korea’s Need for Crypto ETF Approval
In an interview with The Korea Economic Daily, Jeong discussed the challenges facing the stock market and underscored the importance of reforming the financial industry. The Korean stock market is experiencing difficulties, evidenced by a 15% decline in the Korea Composite Stock Price Index (KOSPI) during the latter half of 2024, largely due to a dwindling number of retail investors. Furthermore, there have been rising complaints from investors regarding issues such as unfair trading practices, undisclosed information, repeated spin-offs, and an abundance of struggling companies. Jeong pointed out that South Korea ranks as the third-largest country in the world for digital asset trading, asserting that the cryptocurrency sector holds potential for generating new value within the financial industry. He cautioned that delaying the approval of crypto ETFs could weaken South Korea’s competitive position against other countries, especially since similar products have been successfully launched and traded in the United States.
Influence of U.S. Crypto ETFs on South Korea’s Regulatory Landscape
Jeong criticized the political establishment for lacking an understanding of the market’s realities, which he believes has led to overregulation that hampers growth. Since the Financial Services Commission (FSC) prohibited crypto ETFs in 2017, the agency has remained firm in its stance, even as the U.S. Securities and Exchange Commission (SEC) approved these investment vehicles last year. However, the recent success of spot Bitcoin and Ethereum ETFs in the United States seems to be prompting a regulatory reassessment in South Korea. The FSC is moving away from stringent regulations and has established a new advisory group to reevaluate the ban on crypto ETFs. Jeong has been a vocal proponent for integrating digital assets into institutional finance, arguing that doing so is vital for revitalizing the domestic market and keeping pace with international developments. Earlier this year, he revealed plans for the Stock Exchange to explore the possibility of approving crypto ETFs, citing significant challenges faced by South Korean capital markets that could hinder the growth of local firms. He also warned that the market might encounter similar risks in 2025 due to adverse economic conditions both domestically and globally.
Support for Crypto ETFs from Financial Leaders
In parallel, Seo Yoo-seok, the Chairman of the Korea Financial Investment Association (Kofia), has echoed calls for the approval of these investment products. Speaking at a recent conference, he highlighted the tremendous potential of the digital asset market and urged the country to align with the United States by embracing these financial instruments. Seo emphasized that the introduction of crypto ETFs could promote market transparency, increase institutional participation, and enhance South Korea’s status as a leader in the adoption of digital assets. Bitcoin currently trades at $97,559 on a one-week chart, reflecting the ongoing interest in cryptocurrency investments.
