The U.S. Securities and Exchange Commission (SEC) has granted approval for the listing and trading of Bitcoin exchange-traded funds (ETFs).

However, no anticipated changes in cryptocurrency-related policies are expected for Korea.

The government continues to uphold its policy of not recognising virtual assets as financial assets and prohibits financial institutions from investing in such virtual assets.

The launch of cryptocurrency ETFs, then, is also deemed impossible.

An official from Korea's Financial Services Commission (FSC) stated in a conversation with reporters on the 11th,

"The government has consistently maintained the principle of prohibiting financial institutions from investing in virtual assets for the stability of the financial market and investor protection.There is no situation warranting a change in government policy, and no such review has taken place."

Firm Regulation

Since December 13, 2017, following a ministerial meeting, the government had announced emergency measures related to crypto and prohibited financial institutions from holding, purchasing, collateralising, and investing in virtual assets.

Regarding the SEC's decision, the FSC stated:

"The United States has previously allowed futures ETFs, and some countries such as Hong Kong, Germany, and Canada already operate spot ETFs. The SEC's approval of spot ETFs is not considered a significant event that would bring about changes in the domestic market."

Legally, there is no support for crypto ETFs.

Article 4 of the Capital Market Act only lists financial investment products, currencies, and general goods as underlying assets for ETFs.

Not Budging

The FSC holds a negative stance on amending the law to allow virtual assets as underlying assets for ETFs.

An official from the financial authorities explained that the stability of the U.S. financial sector during the cryptocurrency market collapse was due to the prohibition of financial institutions' investment in virtual assets, unlike domestically."

The official added that the SEC's reluctant approval of virtual asset ETFs is based on a court decision, and if virtual asset investments are recognised, it could weaken the demand foundation of the domestic stock market."

On the SEC front, SEC Chairman Gary Gensler clarified in a statement that the decision is limited to physically-backed exchange-traded products (ETPs) holding Bitcoin and does not signal an intent to approve listing standards for crypto securities.