South Korea’s Exchange Chairman, Eun-Bo Jeong, has shown interest in introducing crypto-based exchange-traded funds (ETFs) this year, in line with the global demand for such products.
During the Securities and Derivatives Market Opening Ceremony on Jan. 2, Jeong emphasized the necessity for innovative financial products to rejuvenate the country’s capital markets. He highlighted the economic challenges faced in the past year, including a shrinking domestic economy, decreased export growth, and geopolitical tensions, which have caused South Korea’s financial markets to fall behind their international counterparts.
Inspired by the successful launch of Bitcoin-related financial products globally, the exchange is exploring new avenues, including crypto-related ETFs, to address these issues. This announcement signifies a potential shift from South Korea’s previous stance, where the Financial Supervisory Service (FSS) had restricted asset managers from offering ETFs tied to crypto-related firms like Coinbase last year.
However, the future of crypto ETFs in South Korea remains uncertain due to regulatory obstacles. Ki Young Ju, CEO of CryptoQuant, has expressed doubts about the country’s readiness to approve such products. Ju compared South Korea’s cautious regulatory approach to that of the US Securities and Exchange Commission (SEC) under Gary Gensler, where resistance to crypto ETFs delayed their adoption for over a decade until 2024.
On a global scale, the success of Bitcoin ETFs could influence South Korea’s interest in these products. The United States witnessed a strong debut of Bitcoin ETFs, attracting significant investments within their first year of trading. According to SoSoValue data, the 12 ETF products have accumulated over $35 billion in inflows and gained traction among institutional investors.
Furthermore, industry experts anticipate further innovation in the ETF landscape this year, given the more favorable regulatory environment under the Donald Trump administration. Nate Geraci, president of the ETF Store, has forecasted the potential launch of combined Bitcoin and Ethereum ETFs, staking options for ETH funds, and broader diversification with assets like Solana entering the ETF space.
As South Korea navigates the complexities of regulatory approval for crypto ETFs, the global success of these products and the evolving ETF landscape could shape the country’s approach to embracing this financial innovation.