South Korea’s Financial Services Commission (FSC) recently cautioned against trading U.S.-based spot Bitcoin exchange-traded funds (ETFs). However, the Office of the President, also known as the Yongsan Presidential Office, has called on the FSC to reconsider its directive regarding ETFs in a bid to align with evolving international standards.
On January 18, the Yongsan Presidential Office urged the FSC to refrain from issuing categorical “do” or “not” directives for ETFs. Tae-yoon Sung, head of the presidential policy office, emphasized the need to evaluate whether international practices could be adapted to South Korea’s legal system.
South Korea is not only considering the risks associated with trading ETF assets but is also exploring the low-risk aspects of ETF offerings. Sung suggested that the government is open to making necessary adjustments to the country’s legal framework to accommodate developments from abroad.
The FSC, a significant financial regulator in South Korea, had previously hinted on January 12 that trading or brokering overseas-listed spot Bitcoin ETFs by domestic securities firms “may violate” the Capital Markets Act. However, the statement also acknowledged that the regulatory framework for cryptocurrencies in South Korea is still evolving and would be reviewed in light of international developments.
In a related development, South Korea’s Financial Intelligence Unit (FIU) is reportedly considering new regulations concerning digital asset mixing services. These discussions were prompted by U.S. sanctions against crypto mixers. The FIU aims to combat illegal money laundering through such services, which help maintain investor privacy and reduce traceability by moving funds across multiple blockchain networks.
The South Korean government is navigating the evolving landscape of cryptocurrency regulations, with the Presidential Office urging flexibility and alignment with global standards in the ETF market. Additionally, the FIU’s considerations regarding digital asset mixing services demonstrate the country’s commitment to combating illicit financial activities in the crypto space.
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