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Two South Korean Brokerages Pause Transactions of Foreign Spot Bitcoin ETFs

Two major South Korean securities companies have suspended their foreign spot Bitcoin ETF transaction services. In response to an announcement from South Korea’s Financial Services Commission, the nation’s primary financial regulatory authority, both Samsung Securities and Mirae Asset Securities have ceased offering new transactions for foreign spot Bitcoin ETFs through their platforms.

The statement indicated that facilitating overseas-listed Bitcoin spot ETFs by domestic securities firms could potentially contravene the current government stance on virtual assets and the Capital Markets Act.

The timing of this announcement appears to be connected to the recent approval of spot Bitcoin ETFs by the United States’ Securities and Exchange Commission (SEC). A Financial Services Commission (FSC) official informed local media that the SEC’s decision would not influence the regulator’s reconsideration of its prohibition on South Korean financial institutions launching their own cryptocurrency ETFs.

Dailian, a local South Korean news outlet, was the first to break the news regarding the suspension of foreign Bitcoin ETF transactions by Samsung Securities and Mirae. As of the end of 2022, Samsung Securities managed approximately $220 billion in assets, while Mirae had around $215 billion in assets under management by the end of June 2023.

Mirae, when contacted by The Block, confirmed that they had indeed ceased transactions involving foreign spot Bitcoin ETFs, a move mirrored by several other Korean financial institutions. A spokesperson for Mirae pointed out that the primary reason for this suspension was the announcement made by the Financial Services Commission (FSC). South Korean financial institutions have grown concerned that providing foreign Bitcoin ETFs may potentially run afoul of Korean government regulations.

It’s important to note that the suspension will not impact the trading of foreign Bitcoin futures ETFs within Korea, as the FSC’s statement did not mention these specifically.

The Mirae spokesperson clarified, “The suspension of [bitcoin futures] ETFs has not been a subject of discussion.”

Situation Is Subject To Change

Despite issuing a warning, the Financial Services Commission (FSC) has expressed its willingness to revisit the situation in light of ongoing efforts to establish regulations concerning virtual assets in South Korea.

The FSC’s statement noted, “However, regulations on virtual assets are being established, such as the Act on the Protection of Users of Virtual Assets, etc., which went into effect in July of this year, and there are overseas cases such as the United States, so we plan to review them further.”

South Korea is in the process of implementing a two-part regulatory framework for cryptocurrencies. The first part, enacted in the previous year and scheduled to take effect in July, focuses on legislation related to virtual assets. This legislation aims to bring crypto markets under regulatory oversight to safeguard investors.

The second part of the regulation will address rules pertaining to the issuance, listing, and delisting of cryptocurrencies, marking the next phase of regulatory development in the country.

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