South Korea’s financial regulator warned on Friday that brokering US spot bitcoin exchange-traded funds (ETFs) may be illegal in local markets.
The statement came on the back of the US Securities and Exchange Commission giving the green light to bitcoin-based ETFs, a landmark moment for the cryptocurrency industry.
Eleven spot bitcoin ETFs began trading in the US on Thursday morning and saw $4.6 billion worth of shares trade hands by the afternoon.
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“For domestic securities firms, any brokering of overseas-listed Bitcoin spot Exchange Traded Funds may violate the existing government stance on virtual assets and the Capital Markets Act,” the Financial Services Commission (FSC) said in a statement.
South Korea does not recognise cryptocurrencies as financial assets and has laws that effectively prohibit ETFs linked to virtual assets.
The country also prohibits financial institutions from investing in cryptocurrencies and has strict reporting requirements for banks with crypto exchange accounts.
Last year, South Korea enacted legislation on virtual assets to bring cryptocurrency markets under regulatory control for investor protection. It will come into effect from July 2024.
The move came after a series of cryptocurrency troubles in recent years, including an alleged fraud by South Korean crypto entrepreneur Do Kwon that heightened public and regulator concerns over crypto markets.
In December, South Korea’s vice financial regulator chief said authorities would take innovation more into account in the next stage of regulating cryptocurrencies.
- Reuters, with additional inputs from Vishakha Saxena
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