Financial Authorities Ban Bitcoin ETF Listing and Trading for a Year

While Bitcoin Spot Exchange-Traded Funds (ETFs) are experiencing 'unprecedented success' in the United States, domestic investors have been unable to trade them for a year. Domestic asset management companies are also blocked from launching Bitcoin ETFs. Criticism arises that the Financial Services Commission is essentially neglecting the establishment of virtual asset industry policies and infrastructure improvements.

According to the Financial Services Commission and the industry on the 9th, the Financial Services Commission has completely banned Bitcoin Spot ETF trading since January last year. It was unprecedented to ban the investment in ETFs listed on overseas stock exchanges. At that time, the Financial Services Commission issued a separate explanatory document stating, "Issuing Bitcoin Spot ETFs or intermediating overseas Bitcoin Spot ETFs may violate the Capital Markets Act," and "This issue is directly related to the stability of the financial market, the soundness of financial companies, and investor protection, so we are examining it closely."

A year has passed since then, but the situation remains unchanged. Both trading and listing of Bitcoin Spot ETFs are blocked. Although the Virtual Asset Committee, a legal advisory body of the Financial Services Commission, was launched last November, the authorities are prioritizing the phased approval of corporate virtual asset real-name accounts.

Other tasks, such as stablecoin regulation and the enactment of the Virtual Asset Business Act, are also piling up. In a business report the day before, the Financial Services Commission maintained a conservative stance, stating that 'Bitcoin Spot ETFs will be allowed only after completing system stability and investor protection measures.'

Meanwhile, following the United States, Hong Kong has also launched cryptocurrency spot ETFs. While global asset managers are attracting new investors through Bitcoin Spot ETFs, domestic financial companies are tied up by regulations. It is estimated that BlackRock has earned $112 million (about 163.5 billion KRW) in fee income from Bitcoin Spot ETFs over the past year.

Currently, the system and infrastructure are still insufficient to launch cryptocurrency spot ETFs domestically. To launch a Bitcoin Spot ETF, custodians such as banks must hold Bitcoin through corporate accounts, but account opening itself is currently blocked. There is also much criticism that the legal regulations on virtual asset custody are insufficient.

Hyung-Kyo Seo, reporter seogyo@hankyung.com