South Korea’s Financial Services Commission (FSC) has announced plans to review its ban on local spot crypto exchange-traded funds (ETFs) and institutional trading accounts on cryptocurrency exchanges. This decision follows the establishment of a new crypto committee aimed at evaluating digital asset policies.
According to a report from local news agency News1, the newly formed advisory group will lead the review process, which was announced during the FSC’s annual audit on Thursday. This marks a significant shift from the FSC’s previous opposition to spot crypto ETFs, which was driven by concerns over financial market stability.
The regulator’s evolving stance appears to be influenced by the recent approval of spot Bitcoin ETFs in the United States. South Korean lawmakers have also been advocating for change, with both the ruling Democratic Party and the opposition pledging support for the approval of local spot Bitcoin ETFs during their election campaigns earlier this year. In May, the winning left-wing party indicated it would request a review of the existing ban.
In addition to the ETF review, FSC Chair Kim Byung-hwan announced plans to investigate the monopolistic structure of South Korea’s digital asset exchanges, particularly focusing on Upbit, which currently dominates the market. This investigation comes in response to concerns raised by Democratic Party lawmaker Lee Kang-il about Upbit’s significant financial ties to its partner bank, K-bank.
Lee noted that Upbit deposits accounted for 20% of K-bank’s total deposits, raising concerns about the potential for a bank run if the partnership were disrupted, especially as K-bank prepares for an initial public offering (IPO).
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