South Korean Brokerages Pause Transactions for Foreign Spot Bitcoin ETFs

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Key Takeaways:

  • South Korean securities firms have suspended Bitcoin spot ETF services in response to regulatory concerns from the FSC.
  • FSC further announced intentions to conduct a comprehensive review of its regulations

In a surprising development, two major players in South Korea’s financial landscape, Samsung Securities and Mirae Asset Securities, have opted to suspend brokerage services for specific Bitcoin exchange-traded funds (ETFs). 

This development comes shortly after a decade-long tussle with the SEC came to an end with a landmark ETF approval decision.

This decision comes in response to a cautionary advisory from South Korea’s financial watchdog, the Financial Services Commission (FSC), and is causing ripples in the local cryptocurrency scene.

The FSC advisory raises concerns about regulatory frameworks and challenges associated with virtual assets, prompting prominent securities firms like Mirae Asset Securities and Samsung Securities to proactively halt their brokerage services for Canadian and German Spot Bitcoin ETFs. 

The announcement warns that domestic securities firms brokering overseas-listed Bitcoin spot ETFs might violate the government’s stance on virtual assets and the Capital Markets Act.

The timing of the advisory coincides with the recent approval of spot Bitcoin ETFs by the United States Securities and Exchange Commission (SEC). However, an FSC official clarified that the SEC’s decision would not prompt a reconsideration of South Korea’s ban on financial institutions releasing their own cryptocurrency ETFs. 

Consequently, South Korean securities companies, including Samsung Securities and Mirae Asset Securities, have suspended trading for German and Canadian spot Bitcoin ETFs and will be unable to facilitate trading for US Spot Bitcoin ETFs.

According to an industry official, “Bitcoin spot ETFs cannot be included in investment portfolios such as domestically listed ETFs or funds. Bitcoin spot ETF trading will be restricted in any way in Korea.” 

This decision underscores South Korea’s steadfast approach to cryptocurrency regulations, with major securities firms taking a cautious stance in response to the FSC’s advisory, navigating the intricate regulatory environment they operate in.

Meanwhile, the FSC assures the public that it is actively working on crypto regulation and will review certain rules, taking into account regulations in other countries such as the United States. 

Despite regulatory challenges, crypto assets remain highly popular among South Korean citizens, boasting a penetration rate of 18.85% in the country. Projections suggest that by 2028, this penetration could grow to 23.45%. 

Notably, members of the National Assembly in South Korea have engaged in significant transactions involving cryptocurrencies, with around $100 million worth of digital assets being bought and sold by parliamentarians over the past three years.

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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