South Korea continues its cautious approach to cryptocurrencies, introducing new recommendations for crypto ETF managers.
Current Guidance for Crypto ETF Managers
South Korea’s Financial Supervisory Service (FSS) has issued recommendations for local asset managers urging them to significantly limit their risk related to crypto companies within their ETFs. This directive is aimed at curbing indirect exposure to firms like Coinbase and MicroStrategy.
Reasons Behind South Korea's Reinforced Stance on Digital Assets
The recent guidance from the FSS underscores the country's long-standing position since 2017, when direct investments in digital assets were restricted. The primary reasons for this approach include investor protection from volatility and maintaining financial stability.
How This Will Affect Existing Crypto ETF Portfolios
New guidelines necessitate a reevaluation of existing ETFs that might exceed recommended exposure limits. For example, certain ETFs may need to rebalance their assets, reducing the percentage of companies tied to cryptocurrencies below 10%.
The latest guidance from the FSS underscores South Korea's commitment to a cautious approach to crypto investments, which could significantly impact asset managers' strategies in the region.
