South Korea’s Financial Services Commission raised concerns that domestic securities firms brokering overseas-listed Bitcoin spot exchange-traded funds (ETFs) may violate local laws, according to a Jan. 12 notice.
The regulator acknowledged that the country was creating a regulatory regime for the emerging industry but cautioned that the brokerage services for these foreign ETFs might be violating its Virtual Asset User Protection Act and the Capital Markets Act.
The FSC further announced intentions to conduct a comprehensive review of its regulations, aligning them with international practices.
Following the warning, several local securities firms, including Samsung Group’s securities division and Mirae Asset Securities, reportedly halted their services for these foreign spot bitcoin ETFs in various countries like Canada and the U.S.
This warning from the FSC comes in the wake of its renewed ban on crypto investments by financial institutions. In Dec. 2017, South Korean regulators implemented emergency measures prohibiting institutional cryptocurrency investments. Subsequently, the country embarked on a comprehensive crypto regulation initiative set to be enforced by July.
While South Korea may not currently embrace spot crypto ETFs, it has recently announced plans for the declaration of crypto assets by public officials. The Ethics Policy Division in the country disclosed that it will publish the assets held by approximately 5,800 public officials.
On Jan. 10, the U.S. Securities and Exchange Commission (SEC) approved the launch of 11 spot Bitcoin ETFs from several issuers, including Grayscale, BlackRock, and others, after years of rejections due to market manipulation concerns.
The ETFs quickly attracted massive interest from the community, recording a trading volume that surpassed $4 billion on their first day of trading.
Meanwhile, major traditional firms in the U.S., like Vanguard, are also restricting their customers from purchasing these Bitcoin ETFs. The company said those investments do not align with its investment philosophy.