South Korea's Ruling Party Eyes Lifting Ban on Spot Bitcoin ETFs

South Korea's ruling People Power Party is exploring avenues to lift the ban on spot Bitcoin exchange-traded funds (ETFs), a move aligned with the party's campaign promises for the upcoming general election in April. This is acording to a report from South Korean news agency News1.

Interestingly, the political party indicates a willingness to review legislative measures, not just Bitcoin ETFs, but also other cryptocurrency-related investment products approved in the U.S.

Despite a previous ban imposed by the country's financial regulator on cryptocurrency ETFs, the ruling party plans to reevaluate and perhaps revise these restrictions as global financial dynamics change.

The People Power Party is considering a phased approach to lifting the country's ban on institutional investments in cryptocurrencies and initial exchange offerings (IEOs). 

As part of the strategy, investment firms will be allowed to enter the crypto space gradually before banks and insurance companies get the same privilege. 

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Regulatory Standpoint and Investor Protection

While the party's proposals are gaining momentum, South Korea's top financial regulator, the Financial Services Commission, remains firm in its opposition to cryptocurrency exchange-traded funds. 

Among the reasons the Commission cites for maintaining existing restrictions are the stability of financial markets and the importance of investor protection. The regulator clarified that the recent approval of spot Bitcoin ETFs in the U.S. does not alter its stance or trigger a reconsideration of the ban in South Korea.

South Korea, not officially recognizing cryptocurrencies as financial assets since 2017, is in the process of crafting a two-part crypto regulation. 

The first part, passed last year, is set to take effect in July 2024. The new regulation establishes clear rules regarding the issuance, listing, and delisting of cryptocurrencies, paving the way for a more regulated and structured crypto landscape.