Foreign Crypto Exposure Spurs Korean ETF Curb

To curb international crypto publicity, South Korea’s Monetary Supervisory Service (FSS) has urged native asset managers to restrict ETF holdings in shares like Coinbase and Technique.

As per an area publication’s report revealed on 23 July 2025, the FSS acknowledged by its directive that the concerned events should adhere to the 2017 administrative guideline on digital currencies, which stays in impact.

An FSS official was quoted by the publication stating, “Just lately, there was a development of deregulation associated to digital property within the U.S. and Korea, however there have been no particular legal guidelines or tips established but.”

“Because of this current tips ought to be adopted till the brand new system is full,” the official concluded.

Moreover, the FSS’s directive additionally contains guidelines that prohibit monetary establishments from holding, investing in, or accepting digital property as collateral. Regulators within the area have prohibited company transactions of digital forex in South Korea since 2017.

On the time of the rule’s passing, issues over cash laundering drove the federal government’s choice, notably regarding the heightened danger related to company buying and selling versus retail buying and selling of cryptocurrencies.

South Korea’s Monetary Supervisory Service has issued verbal steerage to asset managers:

Restrict publicity to crypto-related shares like @coinbase & Technique in ETFs.

Emergency crypto measures from 2017 stay in impact.#SouthKorea #CryptoRegulation #ETFs #Coinbase pic.twitter.com/UTzRBjvHsh

— The Coin Republic (@TCR_news_) July 23, 2025

An official stated, “Though each US and Korean regulators are exhibiting indicators of easing crypto guidelines, no concrete legal guidelines or tips have been carried out.”

The rule follows an elevated regulatory freedom proven by South Korean regulators in latest instances. Simply a few weeks in the past, South Korea’s Ministry of SMEs and startups proposed to raise restrictions that saved crypto corporations from getting tax breaks and different help initiatives.

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Home ETF Limits Questioned Amid Rising Overseas Crypto Publicity

The FSS issued its steerage amid rising issues relating to an elevated presence of “coin-themed shares” reminiscent of crypto exchanges and mining corporations with ETF portfolios.

In keeping with the report, in South Korea’s home listed ETFs, quite a few merchandise maintain greater than 10% of their portfolio in digital asset-related shares. Working example, the Korea Funding Belief Administration’s ACE US Inventory Bestseller ETF holds round a 14.59% stake in Coinbase.

Equally, the KoACT US Nasdaq Progress Firm Lively ETF contains 7.44% in Coinbase and 6.04% in Technique, bringing its whole funding in digital asset-related shares to 13.48%.

Business leaders have identified that these ETFs passively mirror predefined indices. Moreover, these are tough to exclude with out distorting index monitoring.

An trade insider famous within the report, “If shares are arbitrarily excluded with out altering the index, the hole charge might skyrocket.”

“I perceive the regulatory tone, however it’s not straightforward to reply instantly,” he additional added.

Furthermore, there may be rising concern relating to the coverage’s deal with home ETFs. Market contributors have noticed that native buyers have continued to achieve publicity to crypto equities by U.S.-listed ETFs.

One other supply was quoted by the publication, stating, “Proscribing solely Korean merchandise gained’t stem fund flows. Many are merely shifting to abroad automobiles, elevating doubts in regards to the coverage’s real-world affect.”

South Korean Exchanges Wrestle To Break Into Large Leagues

With the South Korean FSS issuing its advisory, posing challenges to worldwide corporations seeking to function within the area, its home gamers, too, are struggling to develop overseas. South Korea’s 5 main crypto exchanges proceed to function regionally inside the area regardless of stiff competitors amongst them.

Business insiders point out that the largest hurdle is regulatory ambiguity. For years now, authorities haven’t devised clear guidelines to manipulate the worldwide enlargement of home crypto corporations. Moreover, banks have additionally reportedly refused to supply worldwide remittance requests from digital asset service suppliers that search to ascertain bases exterior South Korea, citing cash laundering issues.

On the identical time, South Korean buyers face fewer ache factors utilizing world platforms reminiscent of Coinbase, which gives a extra numerous service, reminiscent of derivatives.

Dessislava Ianeva-Aubert, a senior analysis analyst at Kaiko, a crypto information tracker firm, stated, “Now, with regulated U.S. exchanges getting into the perps (perpetual futures) house, Korean exchanges danger falling additional behind except home regulatory constructions evolve, they usually aggressively develop each their product suite and infrastructure to compete at a world stage.”

In keeping with specialists, the way forward for South Korean exchanges going world is determined by the Korean authorities bringing digital asset companies beneath current frameworks.

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Key Takeaways

South Korea’s FSS has urged native asset managers to restrict ETF holdings in shares like Coinbase and Technique to curb international crypto publicity

The FSS’s directive contains guidelines that prohibit monetary establishments from holding, investing in, or accepting digital property as collateral

Quite a few merchandise in South Korea’s home listed ETFs maintain greater than 10% of their portfolio in digital asset-related shares