South Korea’s Exchange Chairman, Eun-Bo Jeong, has signaled interest in introducing crypto-based exchange-traded funds (ETFs) this year, aligning with global demands for such products.
At the Securities and Derivatives Market Opening Ceremony on Jan. 2, Jeong reportedly emphasized the need for innovative financial products to revitalize the country’s capital markets.
Jeong cited the challenges faced by the economy in the last year. These included a shrinking domestic market, reduced export growth and geopolitical tensions.
He explained that these factors have left South Korea’s financial markets lagging behind their global counterparts. The exchange, inspired by the launch of Bitcoin financial products in other countries, plans to investigate new avenues for addressing these issues, such as ETFs that are crypto-related.
This announcement marks a potential shift from South Korea’s previous stance. Financial Supervisory Service (FSS), last year, restricted asset management firms from selling ETFs that were tied to crypto companies such as Coinbase.
Regulatory hurdles, however, continue to limit the growth of crypto ETFs. Ki Young Ju, CEO of CryptoQuant, has raised concerns about the country’s readiness to approve such products.
Ju likened South Korea’s cautious regulatory stance to the Gary Gensler-led US Securities and Exchange Commission (SEC), where resistance to crypto ETFs had delayed their adoption for over a decade until 2024.
Bitcoin ETFs success
Meanwhile, global crypto ETFs’ growing success might influence South Korea’s interest in these products.
Bitcoin ETFs have made an impressive debut in the United States, attracting significant investments during their first trading year. According to SoSoValue, 12 ETFs have attracted more than 35 billion dollars in investments and are increasingly popular among institutional investors.
Market experts expect that the ETF market will continue to innovate this year due to the favorable regulatory environment led by Donald Trump’s administration.
Nate Geraci (President of ETF Store) has stated that the ETF market may see a combination of Bitcoin ETFs and Ethereum ETFs. There will also be staking opportunities for the ETH fund and a broader range of diversification as assets such as Solana enter the ETF arena.
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