Korea Exchange Considers Launching Crypto-Based ETFs
Potential Introduction of Crypto ETFs in South Korea
On Thursday, Jeong Eun-bo, the chairman of the South Korea Stock Exchange, announced an initiative to evaluate the approval of cryptocurrency-focused exchange-traded funds (ETFs) as part of their “value-up program.” This move is aimed at addressing ongoing market challenges and enhancing the exchange’s offerings.
Korea Exchange’s Strategic Plans for 2025
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During the 2025 Securities and Derivatives Market opening ceremony held on January 2, Jeong Eun-bo outlined the Korea Exchange’s intentions to investigate the feasibility of launching crypto-based ETFs within the year. The Chairman acknowledged that South Korea’s capital markets had faced considerable hurdles in 2024, impacting the growth trajectories of domestic companies.
Jeong highlighted that both global tensions and internal political scenarios had rendered the market “noticeably sluggish” compared to other major economies. He emphasized that the South Korean market is likely to continue grappling with risks in the coming year due to unfavorable domestic and international economic conditions.
Despite these challenges, the Chairman affirmed the Korea Exchange’s commitment to its value-up program, which aims to engage more leading companies and foster a management culture prioritizing shareholder value. Jeong also disclosed plans to learn from international examples in exploring new business opportunities like crypto ETFs, paving the way for innovation in the capital market.
The Road Ahead for Crypto ETFs in South Korea
It’s important to note that South Korea has banned crypto ETFs since 2017. The Financial Services Commission (FSC), the nation’s regulatory authority, maintained this stance even after the U.S. Securities and Exchange Commission (SEC) approved similar crypto-based investment products last year. However, in October, the financial regulator formed an advisory group to review digital asset policies, indicating a potential shift from its stringent regulations. This change appears to be influenced by the unexpected success of spot Bitcoin and Ethereum ETFs, which exceeded many experts’ predictions in their inaugural year.
Political Turmoil Impeding New Regulatory Developments
Institutionalizing Cryptocurrency in South Korea
The Korea Exchange’s leadership has previously advocated for the formal integration of cryptocurrency within the nation’s financial system, arguing that the digital asset sector has grown exponentially and wields significant influence. Jeong Eun-bo urged lawmakers and financial institutions to reassess their perspectives on digital currencies, stressing the need for revitalization to remain competitive globally.
The current regulatory stance on digital assets has hindered South Korea’s market from achieving necessary regulatory milestones over the years, stifling its growth and competitiveness. However, the introduction of new crypto-related regulations will be on hold until the resolution of the ongoing political crisis, which may extend for several months.
The Current Political Landscape in South Korea
In December, President Yoon Suk Yeol declared the first emergency martial law in four decades, accusing the opposition Democratic Party of sympathizing with North Korea and engaging in anti-state activities. The National Assembly swiftly responded by nullifying the President’s declaration, ending the martial law within six hours. Subsequently, the Assembly impeached both President Yoon and Prime Minister Han Duck-soo, with Deputy Prime Minister Choi Sang-mok stepping in as the acting leader.
The nation’s presidential security service recently thwarted attempts to detain Yoon, resulting in a tense six-hour standoff at his residence. The anti-corruption agency has announced plans to “strongly demand” compliance with the detention warrant from the current acting leader.
The Constitutional Court is tasked with deciding whether to remove President Yoon from office or reinstate him. A minimum of six justices from the nine-member court must vote in favor of removal for it to proceed.
As the political situation unfolds, the future of crypto regulation and the potential introduction of crypto ETFs in South Korea remains uncertain, pending the resolution of these high-stakes political developments.
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