South Korea Moves Towards Bitcoin ETF Despite Regulatory Delays

Cryptocurrency ETFs Gain Traction in South Korea

The Korea Exchange (KRX), which operates the country’s stock and derivatives market, aims to expand its range of investment products including cryptocurrency exchange-traded funds (ETFs) and derivatives as part of a broader initiative to modernize capital markets.

During the opening ceremony of the new trading year, KRX President Jeong Eun-bo indicated that the exchange is operationally ready to support cryptocurrency ETFs, even as regulators continue to debate whether such products can be approved under existing regulations.

Jeong framed this initiative as part of South Korea's efforts to overcome the so-called "Korean discount," a phenomenon where domestic stocks are traded at lower valuations than their global counterparts. In the cryptocurrency sphere, Bitcoin is often traded at a premium on local exchanges compared to international platforms.

He also highlighted initiatives such as a gradual extension of trading hours and preparations for digital finance. Although his New Year’s address did not announce new regulations, it emphasized increased coordination between market operators and policymakers as the country assesses the integration of cryptocurrencies into the traditional financial system.

While the infrastructure is ready, regulatory issues remain unresolved. KRX's comments come amid ongoing reviews by South Korean regulators regarding the legal status of cryptocurrency-based investment products. Under current rules, cryptocurrencies are not classified as eligible assets for securities, effectively blocking cryptocurrency-based ETFs despite rising demand from investors.

The Financial Services Commission has previously stated that it is studying potential reforms through a dedicated cryptocurrency committee, including whether digital assets could be recognized under the Capital Markets Act. While regulators weigh these decisions, KRX’s message suggests that market infrastructure is no longer a limiting factor.

By signaling its public readiness for the listing and trading of cryptocurrency-related products, the exchange is preparing to act swiftly once regulatory barriers are removed.

Support for cryptocurrency ETFs has grown among financial and political institutions in the country over the past year. In February, the head of the Korea Financial Investment Association (KOFIA) stated that the industry would advocate for the listing of Bitcoin and Ether ETFs domestically to meet the increasing demand from investors seeking regulated exposure to cryptocurrencies.

The issue later entered the political arena ahead of the presidential elections in June. In May, Lee Jae-myung, the favored candidate of the Democratic Party, promised to approve cryptocurrency ETFs if elected. Lee subsequently won the elections.