South Korea to Launch Bitcoin ETFs by 2025
South Korean regulators are preparing for a significant shift in their crypto policy, with plans to introduce spot Bitcoin and other cryptocurrency exchange-traded funds (ETFs) by the second half of 2025.
South Korea's Plans for Spot Crypto ETFs
According to recent reports, the Financial Services Commission (FSC) has submitted a comprehensive roadmap to the Presidential Committee on State Affairs Planning. This roadmap details new regulations and infrastructure necessary for the issuance, trading, and valuation of these crypto ETFs. This initiative aligns with President Lee Jae-myung's commitment to integrating cryptocurrencies into the mainstream financial system.
The FSC aims to establish clear rules regarding custody, trading platforms, and fund evaluation before any ETF is approved. While the target launch date is the latter half of 2025, officials acknowledge the possibility of adjustments to the timeline.
Retail investors are expected to gain access to Bitcoin and other crypto assets through established brokerage accounts, eliminating the need for self-custody.
Stablecoins Pegged to the Won
In addition to ETFs, the FSC plans to introduce a domestic stablecoin pegged to the Korean won by the end of 2025. This initiative is intended to reduce capital flight and offer a domestically regulated digital payment solution.
The proposed stablecoin framework will encompass comprehensive rules on issuance, reserve requirements, and stringent auditing standards to build user trust.
Investor Protections and Regulations
Investor protection is a central component of the proposed regulations. The government intends to implement a "one-strike" policy for companies involved in market manipulation, requiring executives to return any illegally obtained profits. Companies violating these regulations could face accelerated delisting. Furthermore, stricter penalties for unfair trading practices and enhanced disclosure requirements for crypto firms are under consideration.
Market Impact and Future Steps
South Korea already boasts a significant retail crypto market, with local investors holding approximately $76 billion in digital assets at the close of 2024. The introduction of ETFs could channel a portion of these assets into regulated products, potentially mitigating market volatility and attracting investment from risk-averse investors.
The FSC is also considering extending trading hours for the Korea Exchange from 6.5 to 12 hours daily, potentially improving liquidity across various asset classes.
While promising, the success of this initiative hinges on the careful development of the final regulations. Robust custody measures to prevent hacks, accurate pricing mechanisms reflecting real-time market conditions, and rigorous auditing standards to validate underlying asset holdings are crucial.
This roadmap represents a significant shift in South Korea's crypto policy. If implemented successfully, it could position South Korea alongside the US, Canada, and parts of Europe in offering spot-based crypto ETFs, potentially influencing other Asian markets. Codeum, a leader in blockchain security and development, offers smart contract audits, KYC verification, custom smart contract and DApp development, tokenomics and security consultation, and partnerships with launchpads and crypto agencies to ensure the security and success of projects in this evolving landscape.