Korean Financial Services Commission Finally Considers Introducing Spot ETFs

- Financial Services Commission Considering Formation of Digital Asset Committee - Reviewing Approval for Spot ETFs and Corporate Account Opening [Unblock Media] The Financial Services Commission (FSC) is reviewing significant policy changes in the virtual asset market. They are considering the formation of a Virtual Asset Committee to approve spot Exchange-Traded Funds (ETFs) and allowing corporate accounts for virtual asset trading. A spot ETF is a fund that directly holds underlying assets such as stocks or virtual assets. In the United States, spot ETFs based on Bitcoin and Ethereum have gained significant popularity and successfully established themselves in the market since 2021. The FSC announced its intention to complete the policy review by mid-2024, increasing the likelihood of spot ETF approval in South Korea by late 2024. Another critical discussion point is the issue of corporate accounts for virtual asset trading. Currently, corporations in South Korea cannot open accounts on virtual asset exchanges, posing a barrier for institutional investors to enter the market. This limitation primarily stems from complex procedures and legal issues related to Korea's anti-money laundering (AML) regulations. For instance, to issue a real-name account, corporations must comply with rigorous Know Your Customer (KYC) procedures and AML regulations, which can be complicated and time-consuming. Allowing corporations to open real-name accounts for virtual asset trading is expected to significantly increase market liquidity by enabling institutional investors to actively participate. In addition, the FSC has announced the establishment of the Digital Asset User Protection Foundation, which will manage a system to return assets to users of defunct virtual asset businesses. This foundation plays a crucial role in returning assets of defunct virtual asset businesses according to legal procedures. For example, users must submit a request on the Digital Asset User Protection Foundation website within three months of business closure, and the foundation will review and process the return within a month. This process provides essential protection for investors, ensuring they can safely reclaim their assets even in the event of sudden business bankruptcy or closure. Such measures enhance market transparency and stability, allowing investors to engage in virtual asset trading with confidence. In summary, the FSC's policy changes could mark a significant milestone in strengthening the regulatory framework of South Korea's virtual asset market, aligning with global market trends. This will not only improve market transparency and reliability but also increase market liquidity, fostering robust development.