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The U.S. Securities and Exchange Commission (SEC) has approved an Ethereum spot ETF, following the approval of a Bitcoin spot ETF. However, this will not be available in South Korea due to current laws that prohibit spot ETFs for virtual assets. The Korean Financial Services Commission (FSC) maintains that these ETFs violate the Capital Market Act, which does not recognize cryptocurrencies like Bitcoin and Ethereum as underlying assets.
The FSC’s position aligns with a 2017 government policy prohibiting financial institutions from engaging with virtual currencies to prevent speculative investments. This stance has remained unchanged under the current administration, thus prohibiting domestic securities firms from dealing with Bitcoin-Ethereum spot ETFs.
The opposition, led by the Democratic Party of Korea, argues that South Korea risks falling behind global trends in digital assets. They propose legal amendments to allow trading of spot ETFs with cryptocurrencies and include them in tax-free individual savings accounts (ISAs). This initiative will be a key issue in the upcoming National Assembly, highlighting a significant policy debate between the ruling and opposition parties.
