South Korea takes a step in regulating cryptocurrencies by forming a Virtual Asset Committee to oversee spot ETFs.
Formation of the Virtual Asset Committee
On October 10, South Korea's Financial Services Commission (FSC) announced the creation of a Virtual Asset Committee to oversee the approval of spot crypto exchange-traded funds (ETFs) in the country. Led by FSC Vice Chairman Soyoung Kim, the committee will include representatives from various government sectors and nine members from the private sector, providing guidance on critical issues in the digital asset landscape, including corporate account authorization. Currently, the South Korean Capital Markets Act prohibits Bitcoin and other crypto ETFs, as well as corporate accounts for digital assets, primarily due to anti-money laundering concerns.
User Protection and Registration Updates
To further support users, the FSC has launched the Digital Asset User Protection Foundation, a non-profit organization dedicated to helping individuals recover assets from defunct service providers. Additionally, the FSC is reviewing renewal applications for digital asset service providers, with some registrations set to expire in October 2024. Chairman Kim Byung-hwan emphasized the agency's commitment to establishing a robust monitoring system as new laws protecting virtual asset users come into effect.
Market Impact and Future Plans
CryptoQuant CEO Ki Young Ju noted that the approval of a spot Bitcoin ETF could help reduce the 'Kimchi premium,' a term that describes the higher average prices of crypto in South Korea compared to global markets. This premium often arises from increased domestic demand and fluctuates with market conditions and regulatory changes, making it a key indicator for traders. Moreover, the FSC plans to gradually roll out the second phase of legislation, which will introduce additional regulations for crypto service providers, enhancing the overall regulatory framework in South Korea.
The establishment of the committee and the introduction of new measures showcase South Korea's commitment to strengthening cryptocurrency regulation, which may have implications on both domestic and international markets in the future.