South Korea will explore cryptocurrency ETFs in 2025 due to demand

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South Korea Stock Exchange CEO Jeong Eun-bo on Thursday revealed his plan to “explore” the approval of cryptocurrency-based exchange-traded funds (ETFs) to continue its “value enhancement program” and address the current market challenge.

The Korean stock exchange discovers cryptocurrency ETFs

January 2 Jeong Eun-bo announced Korea Exchange’s plan to explore cryptocurrency ETFs this year at the opening ceremony of the securities and derivatives market in 2025. The chairman said that in 2024, South Korean capital markets face stern challenges that undermine the growth potential of local companies.

Jeong also noted that global conflicts and domestic political developments had made the market “significantly sluggish compared to major countries.” The South Korean market will remain at risk in the fresh year as “domestic and global economic conditions are unfavorable.”

Nevertheless, the CEO explained that the exchange will continue to promote its value program to “engage more leading companies and establish a management culture focused on shareholder value.”

Moreover, Jeong revealed that Korea Exchange will “analyze overseas cases for new business opportunities such as cryptocurrency ETFs and explore new territories in the capital market.”

Notably, cryptocurrency ETFs have been banned in South Korea since 2017. The country’s regulator, the Financial Services Commission (FSC), reaffirmed its position after the US Securities and Exchange Commission (SEC) approved investment products based on on cryptocurrencies.

However, the financial watchdog announced in October that a newly formed advisory group to discuss digital assets policy would review the ban, signaling an apparent shift away from stringent regulations. This shift appears to have been influenced by the success of Bitcoin and Ethereum spot ETFs, which exceeded most experts’ expectations in their first year.

The political crisis in South Korea is holding back fresh regulations

The head of the Korea Exchange previously called for the institutionalization of cryptocurrencies in the country to “create added value.” Jeong said lawmakers and financial institutions should take a different look at digital assets, arguing that the industry has grown and gained significant influence in recent years.

The chairman added that South Korea should consider including digital assets in institutional finance as the market needs revitalization to compete with other countries.

The regulator’s current position on digital assets means that the market has not crossed various regulatory thresholds for years, which poses a challenge to the development and competitiveness of the market. However, regulations related to cryptocurrencies will be suspended until the political crisis is resolved, which may take several months.

In December, South Korean President Yoon Suk Yeol declared the first state of emergency in forty years. Yoon accused the opposition Democratic Party, which has a majority in the National Assembly, of sympathizing with North Korea and anti-state activities.

The National Assembly voted to annul the President’s declaration and within six hours successfully ended martial law. The Assembly has since impeached Yoon and Prime Minister Han Duck-soo, who became acting president after Yoon’s powers were suspended.

According to the Associated Press reportsSouth Korea’s presidential security service today prevented authorities from detaining Yoon following a six-hour standoff at the impeached president’s residence.

As a result, the anti-corruption agency plans to “strongly demand” that the current acting leader, Deputy Prime Minister Choi Sang-mok, instruct the services to comply with the arrest warrant.

The Constitutional Court is expected to decide whether to remove Yoon from office or reinstate him. To remove him, at least six judges of the nine-member court must vote in favor of the resolution.

Total crypto market capitalization is at $3.41 trillion in the one-week chart. Source: TOTAL on TradingView

Featured image from Unsplash.com, chart from TradingView.com

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