Financial authorities are showing a conservative attitude toward virtual assets, making it virtually difficult for virtual asset spot exchange-traded fund (ETF) trading this year as well. This stands in stark contrast to domestic investors and capital market institutions, such as the Korea Exchange and the Korea Financial Investment Association, which foresee virtual assets as a future source of revenue.
According to the Korea Securities Depository, domestic investors bought numerous overseas stocks, including virtual asset-related stocks and ETFs, from the top 50 most purchased stocks last year. Notably, the corporation MicroStrategy, known for holding the most Bitcoin in the world, saw transaction volumes of about 5.5 trillion won, and the global virtual asset exchange Coinbase also topped 2 trillion won in transaction volumes. Investors particularly have a high interest in virtual asset spot ETFs, which are banned for trading in Korea, as they bought over 6 trillion won in tradeable Bitcoin-related futures ETFs as an alternative investment.
Interest in virtual asset ETF investments was also noted in the New Year speeches of capital market-related ministries recently. Jeong Eun-bo, chairman of the Korea Exchange, announced in his New Year speech that he would seek to explore new areas of domestic capital markets by focusing on new businesses such as virtual asset ETFs this year, and Seo Yoo-seok, president of the Korea Financial Investment Association, also pointed to the legalization of tokenized securities (STO) and virtual asset ETFs as future revenue sources in his New Year speech.
In the capital market, including exchanges and the Korea Financial Investment Association, there is an optimistic atmosphere hoping that the category of products known as virtual assets, starting with Bitcoin, will be incorporated into the system and lead to new sources of revenue. For example, in the United States, after the U.S. Securities and Exchange Commission (SEC) approved the Bitcoin spot ETF last January, over $35 billion (about 51 trillion won) flowed into the market in less than a year.
Moreover, last month, the assets under management for Bitcoin spot ETFs in the U.S. surpassed $129 billion (about 185 trillion won), exceeding those for gold ETFs in the U.S. The news that Bitcoin has overtaken gold, a representative safe asset, has drawn attention in overseas markets. This indicates that trust and interest among investors have significantly increased, and foreign news outlets interpreted the approval of Bitcoin spot ETFs as a signal that virtual assets have transitioned from speculation to being integrated into the asset classes of the existing financial sector.
However, unlike the overseas market where virtual asset ETF investment is active, the approval of ETFs remains uncertain in Korea this year as well. The Financial Services Commission and the Financial Supervisory Service, responsible for regulating virtual assets, continue to maintain a conservative stance. In his New Year speech, Kim Byung-hwan, chairman of the Financial Services Commission, who has been negative about Bitcoin ETFs, did not mention any plans related to virtual assets, only briefly stating that they would enhance the supervisory framework. The New Year speech by Lee Bok-hyun, commissioner of the Financial Supervisory Service, also did not mention virtual assets.
In January of last year, the Financial Services Commission issued a legal interpretation stating that Bitcoin spot ETFs are not considered financial investment products under the current law and prohibited intermediary transactions. Spot ETFs must track a basic index composed of underlying assets, and according to the Capital Markets Act, the scope of underlying assets includes financial investment products, currency, general goods, and credit risks. Virtual assets are not included in the requirements for underlying assets. However, futures ETFs have been allowed to trade as per usual practices because they are based on contracts that are already overseen and monitored by global financial authorities, including the Chicago Mercantile Exchange (CME).
A securities industry official said, "The institutional incorporation of virtual assets is already active worldwide, and if Trump takes office this month, this trend will accelerate further," adding, "The authorities are banning Bitcoin spot ETFs due to differences in legal interpretation, and if needed, it is essential to expedite the establishment of domestic virtual asset-related systems, even through amendments to the Capital Markets Act."