South Korea Considers Crypto Ban Despite US Bitcoin ETF Boost

The recent approval of Spot Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) has sent waves of excitement through the global financial community. Investors and influential figures alike are hailing this development for its potential advantages. However, amidst this global enthusiasm, South Korea’s regulators seem to be playing a different tune.

The country’s Financial Services Commission (FSC), as reported by Kyunghyang on a local news channel, expressed an unexpected lack of enthusiasm, stating that the approval of spot Bitcoin ETFs in the U.S. is not a game-changer for them. Surprisingly, this stance may lead to the decision to impose a ban on cryptocurrencies within the nation.

South Korea’s Regulations: A Closer Look

South Korea’s Financial Services Commission (FSC) is taking a firm stance against cryptocurrencies, citing concerns over illegal fund outflows, money laundering, and speculative activities that could lead to investor losses.

Recently FSC plans to get feedback for the proposed step by the government which will last until Febuary 13. They will count this public feedback as pivotal which will be reviewed in the first half of 2024.

In its ongoing mission to regulate the crypto industry, the FSC is proposing a ban on using credit cards for digital currency purchases. Additionally, the commission is introducing rules aimed at protecting cryptocurrency exchange users.

These regulations mandate that exchanges store a minimum of 80% of customer deposits in cold wallets. Furthermore, fees will be imposed on customers withdrawing funds from their deposits, with the goal of ensuring responsible practices within the crypto industry.

Also Read: Attention Traders: Bitcoin Spot ETF Might Cause a Major Crash; Here’s Why!

South Korea’s Ongoing Strategies

South Korea is working on two distinct regulatory plans. The first, initiated last year, focuses on transparent rules for the listing and delisting of cryptocurrencies. The second, set to take effect in July 2024, aims to further refine regulations surrounding virtual assets.

“The reason the U.S. financial sector did not collapse when the virtual asset market plummeted was because it prohibited financial institutions from investing in virtual assets (like in Korea),” adding, “The SEC also reluctantly allowed virtual asset ETFs on a limited basis in response to the court decision. If investment in virtual assets is recognized, the demand base of the domestic stock market may weaken”

Financial Regulator

All in all… As South Korea grapples with the decision to embrace or ban cryptocurrencies, the global financial landscape watches closely. The outcome of public feedback and subsequent regulatory decisions in South Korea will undoubtedly shape the future of crypto in the nation and, by extension, its global impact.

Also Read: US & South Korea Join Hands for Crypto Regulation: New Rules from 2024?