South Korea to discuss approval of spot Bitcoin ETFs

South Korea’s Financial Services Commission (FSC) announced the creation of a Virtual Asset Committee to address the approval of spot crypto exchange-traded funds (ETFs) in the country on Oct. 10, according to local media reports.

South Korea’s Financial Services Commission (FSC) has announced the formation of a Virtual Asset Committee to advise on the approval of spot crypto exchange-traded funds (ETFs) in the country, as reported by local media on Oct. 10.

The committee will serve as an advisory body for the crypto industry, providing comprehensive oversight and guidance. It will be headed by Soyoung Kim, Vice Chairman of the FSC, and will include representatives from relevant government departments and the private sector.

Bitcoin (BTC) and other crypto ETFs are currently prohibited under the South Korean Capital Markets Act. This ban also applies to corporate accounts for digital assets due to concerns regarding anti-money laundering compliance.

The FSC has also established the Digital Asset User Protection Foundation, a non-profit organization that will assist users in recovering assets from service providers that have ceased operations, according to the report.

The agency is examining renewal applications for digital asset service providers, with some registrations expiring in October 2024.

Chairman Kim Byung-hwan stated before the National Assembly that the agency will prioritize establishing a strong monitoring system as the law protecting virtual asset users goes into effect.

The regulator also mentioned its focus on investigating vulnerabilities in the trading monitoring system and taking strong action against unfair trading practices.

Additionally, the FSC plans to gradually implement the second phase of legislation, which will include further regulations on the business activities of crypto service providers as part of its ongoing effort to enhance the crypto regulatory framework in the country.

Approval of spot Bitcoin ETFs in South Korea will reduce the ‘Kimchi premium’ by allowing arbitrage mutual funds and market makers to enter the market, according to CryptoQuant CEO Ki Young Ju.

The Kimchi premium refers to the phenomenon where crypto prices in South Korea are significantly higher than in the rest of the global markets. This premium is typically attributed to a higher demand for crypto within the country compared to the rest of the world.

According to Chainalysis, the Kimchi premium fluctuates depending on market conditions and regulatory changes, making it a key indicator for traders. The premium reached a new high when Bitcoin hit a new all-time high in March.

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