South Korea’s Financial Services Commission expressed concern that domestic securities firms brokering foreign-listed Bitcoin spot exchange-traded funds (ETFs) may be violating local laws, according to a Jan. 12 notice.
The regulator acknowledged that the country was creating a regulatory regime for the emerging sector, but warned that the brokerage services for these foreign ETFs could fall foul of the Virtual Asset User Protection Act and the Capital Markets Act.
The FSC further announced its intention to conduct a comprehensive review of its regulations, bringing them into line with international practices.
Following the warning, several local securities firms, including Samsung Group’s securities division and Mirae Asset Securities, have reportedly suspended their services for these foreign spot bitcoin ETFs in several countries such as Canada and the US.
This warning from the FSC comes in the wake of the renewed ban on crypto investments by financial institutions. In December 2017, South Korean regulators introduced emergency measures banning institutional investments in cryptocurrency. The country then embarked on a comprehensive crypto regulation initiative that would come into effect in July.
While South Korea may not currently embrace spot crypto ETFs, it recently announced plans for the declaration of crypto assets by government officials. The country’s Ethics Policy Department has announced that it will publish the assets of about 5,800 government officials.
On January 10, the U.S. Securities and Exchange Commission (SEC) approved the launch of 11 spot Bitcoin ETFs from various issuers, including Grayscale, BlackRock and others, after years of rejections due to concerns about market manipulation.
The ETFs quickly attracted tremendous interest from the community, recording trading volume that exceeded $4 billion on their first day of trading.
Meanwhile, large traditional companies in the US, such as Vanguard, are also restricting their customers from purchasing these Bitcoin ETFs. The company said these investments are not in line with its investment philosophy.