According to local media reports, on October 10, South Korea’s Financial Services Commission (FSC) announced the establishment of a Virtual Asset Committee to address the approval of spot crypto exchange-traded funds (ETFs) in the country.
The committee will act as an advisory body designed to provide comprehensive oversight and guidance to the crypto industry. It will be led by FSC Vice Chairman Soyoung Kim and include representatives from related government departments and nine members from the private sector.
In addition, the Virtual Asset Committee will address key issues in the South Korean digital asset sector, including the authorization of corporate accounts.
Bitcoin (BTC) and other crypto ETFs are banned under the current South Korean Capital Markets Act. The ban extends to corporate accounts for digital assets due to anti-money laundering compliance concerns.
Non-profit user advocacy organization
In addition to the new commission, the FSC has established the Digital Asset User Protection Foundation, a non-profit organization designed to help users recover assets from service providers that have ceased operations.
The FSC is also reviewing renewal applications for digital asset service providers, with some registrations set to expire in October 2024.
Chairman Kim Byung-hwan, in his address to the National Assembly, reiterated the agency’s commitment to developing a robust monitoring system as the Law to Protect Virtual Asset Users comes into effect.
Furthermore, the regulator reiterated its focus on investigating vulnerabilities within the trade monitoring system and enforcing strict measures against unfair trade practices.
The FSC also plans to gradually implement the second phase of the legislation, which will include further regulations on the business activities of crypto service providers, as part of its ongoing efforts to improve the regulatory framework for crypto in the country.
Relaxation of the kimchi premium
Ki Young Ju, CEO of CryptoQuant, said the approval of Bitcoin ETFs in South Korea will minimize the “Kimchi premium” by opening the market to arbitrage from mutual funds and market makers.
Kimchi premium is a term to address the phenomenon where crypto prices in South Korea are on average higher than the rest of the global markets. This is usually caused by higher demand for crypto within the country compared to the rest of the world.
According to Chainalysis, the Kimchi premium fluctuates based on market conditions and regulatory changes, making it a popular indicator among traders. When Bitcoin hit a new all-time high in March, the Kimchi premium also registered a new all-time high.