No Bitcoin ETF will get approval in South Korea unless the government introduces new crypto rules, the head of the Financial Supervisory Service (FSS) said on March 5.
FSS chief Lee Bok-hyun struck an optimistic note this week about possible Bitcoin spot exchange-traded fund approval.
But according to media outlet Nocut News, Lee also tempered his claims with several calls for “caution”.
No Bitcoin ETF if ‘regulation isn’t coming’
Lee was widely reported to have claimed on March 5 that he is “one of the regulators who is bullish on virtual assets.” He claimed that “there are others who are more cautious.”
But Lee also said that certain regulatory conditions still need to be met before regulators can greenlight a crypto-related financial product. He explained:
“On [approve] A Bitcoin spot ETF, we need a system that allows regulators to manage and operate virtual assets. Only when this is in place can the [BTC] spot ETF market is opened in South Korea.”
Seoul is under pressure to approve Bitcoin ETFs in line with a landmark move from Washington-based regulators in January.
But in mid-January, anonymous financial investment industry officials said new crypto regulation should wait until the end of next month’s legislative elections.
South Koreans will go to the polls on April 10 to vote for members of the National Assembly.
Crypto Rules ‘Overhaul’ On The Way?
The same officials said that a major “overhaul” of crypto legislation is likely to follow the election.
However, the nature of this law change may depend on the composition of the unicameral parliament.
President Yoon Seok-yeol’s manifesto promises before his election in 2022 contained a series of pro-crypto industry pledges.
So far, he has failed to deliver on many of these – including an overhaul of the country’s long-standing ban on the issuance of domestic cryptoassets.
Lee, meanwhile, said that regulators are “constrained” by the current legal system, especially when it comes to Bitcoin ETF approval.
While he stopped short of saying there would be no Bitcoin ETF greenlight under his watch, he seemed eager to temper expectations. Lee said:
“At this stage we are open to discussing various possibilities. But since there are restrictions under the current Capital Markets Act, we need to consider policy direction. We have to do this while we look at whether amendments to legislation are at all possible.”
South Korean stocks are undervalued compared to many of their peers. Now the government is trying to fix the “Korea discount” by making company boards more accountable to shareholders https://t.co/jJWBb8x1rP
— Bloomberg (@business) March 6, 2024
Next parliament will deal with manipulation of crypto prices, says FSS chief
Lee suggested that further crypto regulations could focus on efforts to stamp out altcoin price manipulation.
Several high-profile altcoin-related court cases have dominated the news in recent years.
These range from allegations of coin manipulation at smaller exchanges, as well as large exchanges such as Bithumb. Ongoing Terra-related trials are also in the public eye. Lee said:
“There is currently no institutional mechanism to prevent crypto-related price manipulation, theft or hacking. Once these things are in place and confidence is established in the virtual assets themselves, we can discuss the second round of legislation related to virtual assets. This is when we will see if they can be brought into the financial system.”
Lee concluded that “the next National Assembly” — in other words, the post-election house — would be tasked with creating new crypto regulation.
[Election 2024] How will the general election result play out for Yoon?https://t.co/4epCw9jIL4
— The Korea Herald The Korea Herald (@TheKoreaHerald) March 4, 2024
It appears that the FSS will no longer make efforts to police the crypto sector or approve crypto ETFs until the end of April at the earliest.
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