The head of South Korea’s top financial investment association has called for the country to allow exchange-traded funds (ETFs) tied to cryptocurrencies, warning that failure to do so could leave South Korea lagging behind in the fast-growing global virtual asset market.
Speaking at a press conference on Wednesday, Korea Financial Investment Association (KOFIA) Chairman Seo Yoo-seok emphasized the need for regulatory changes to keep pace with international trends.
“The global virtual asset market is likely to see further growth backed by the Trump 2.0 administration’s favorable stance toward the investment vehicle,” Seo stated at the industry body’s headquarters in western Seoul.
KOFIA, which serves as a self-regulatory organization representing brokerage houses and asset managers, is advocating for greater institutional support for cryptocurrency-based financial products.
Regulatory Hurdles for Spot Crypto ETFs
At present, South Korean investors do not have access to spot cryptocurrency ETFs due to restrictions under the country’s Capital Market Act. The Financial Services Commission (FSC), South Korea’s top financial regulator, has ruled that virtual assets cannot be classified as underlying assets for securities.
Seo pointed out that other major financial markets, including the United States, Canada, and Hong Kong, have already approved the listing of spot cryptocurrency ETFs.
“This year, we will discuss the institutionalization of the security token offering and continue to request the authorities to allow the listing of virtual asset spot ETFs,” he said.
The push for spot crypto ETFs comes amid increasing global adoption of digital asset investment vehicles, with major financial institutions integrating cryptocurrency products into traditional investment portfolios.
Broader Capital Market Reforms
Beyond cryptocurrency ETFs, Seo stressed the importance of the government’s corporate value-up initiative, which seeks to enhance the value of publicly listed companies and boost shareholder returns.
“The value-up initiative is about more than just boosting stock prices. It is an integrated strategy that calls for the qualitative growth of the economy and the capital market,” he noted.
Seo also projected that the country’s stock market would benefit from the upcoming launch of an alternative trading system (ATS) next month. Nextrade, South Korea’s first ATS platform, is set to go live on March 4 and is expected to introduce more competition in the local financial market.
“The new ATS platform will spur market competition,” Seo said. “The capital market’s infrastructure will experience qualitative growth based on the diversification of traded products and competition.”
A Call for Progressive Financial Policies
Seo, a former CEO of leading asset manager Mirae Asset Global Investments, took office as KOFIA chairman in January 2023. His three-year term is set to conclude at the end of this year.
With South Korea’s financial markets at a crossroads, Seo’s calls for spot crypto ETFs and broader capital market reforms signal a push for modernization. Whether regulators will heed his recommendations remains to be seen, but as global financial markets evolve, pressure is mounting for South Korea to adapt and stay competitive.
