The new South Korean leadership will be installed for BTC ETF trading

The Democratic Party of Korea's Financial Services Commission (FSC) is calling for a re-examination of the legal interpretation of spot Bitcoin (BTC) exchange-traded funds (ETFs), local press reports. Allowing spot ETFs with underlying virtual assets is one of the party's campaign promises.

An unnamed Democratic Party Policy Committee official told the Korea Economic Daily that the party will make the request after the opening of the National Assembly next June. In South Korea's April election, the opposition party swept to power and holds 175 of the 300 seats in the legislature.

The FSC statement on January 12 that domestic securities companies may violate the capital market law by listing foreign BTC ETFs. The United States Securities and Exchange Commission approved BTC ETF trading on January 10. The stance of South Korea's financial regulator has not been well received. The former presidential administration urged the FSC to reconsider its decision on January 18.

Related: South Korea's chief financial regulator to discuss crypto with Gary Gensler: Report

Under the current interpretation, virtual assets are not included in the definition of an asset under the Capital Markets Act. The official told the newspaper:

“If the authority's response to the interpretation of the authority is insufficient, we are thinking of amending the capital market law.”

The newspaper stated that the process of amending the decree would require many steps and would take months at best. The official also said that discussions on the second phase of the 2020 Virtual Property Trading Rights Act will begin in the second half of the year.

Hong Kong began trading in BTC and Ether (ETH) currencies on April 30, raising hopes of a similar market in South Korea, although Hong Kong's ETF underperformed.

Since the enactment of the 2020 law, South Korean regulators have been tightening their grip on the crypto market. In the year Tougher sentences for crypto-related crimes in 2024 have been drafted, and new guidelines for cryptocurrency exchanges have been issued.

Magazine: South Korea's unique and fascinating crypto universe