South Korea Contemplates Cryptocurrency Prohibition Despite Boost from US Bitcoin ETF

The recent approval of Spot Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) has sparked excitement within the global financial community. Investors and influential individuals are praising this development for its potential benefits. However, South Korea’s regulators have a different perspective.

According to a report by Kyunghyang, the Financial Services Commission (FSC) of South Korea does not share the same enthusiasm, stating that the approval of spot Bitcoin ETFs in the U.S. does not significantly impact them. This unexpected stance may even lead to a ban on cryptocurrencies within the country.

The FSC is taking a firm approach against cryptocurrencies due to concerns about illegal fund outflows, money laundering, and speculative activities that could lead to investor losses. To regulate the crypto industry, the commission plans to ban the use of credit cards for digital currency purchases and introduce rules to protect cryptocurrency exchange users.

These regulations include requiring exchanges to store at least 80% of customer deposits in cold wallets and implementing fees for customers withdrawing funds from their deposits, promoting responsible practices within the industry.

South Korea is implementing two regulatory plans. The first, initiated last year, focuses on transparent rules for listing and delisting cryptocurrencies. The second, set to be effective in July 2024, aims to further refine regulations surrounding virtual assets.

The outcome of public feedback and subsequent regulatory decisions in South Korea will have a significant impact on the future of cryptocurrencies in the nation and their global influence. The global financial community is closely monitoring these developments.