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January 12, 2024

South Korea warns U.S. Bitcoin ETFs may break local regulations.

TLDR: The Financial Services Commission (FSC) in South Korea has stated that recently-listed U.S. bitcoin exchange-traded funds (ETFs) may violate local law. The FSC said that domestic brokerage of U.S.-listed bitcoin spot ETFs by Korean securities firms could potentially conflict with the country’s Virtual Asset User Protection Act and Capital Markets Act. The FSC has announced that further review and consideration of crypto ETFs is planned.

The regulator did not provide specific details on how exactly the U.S. bitcoin ETFs could be in violation of local law. South Korea has been making efforts to regulate the cryptocurrency market and establish clear guidelines for businesses and investors in the industry. In 2017, the governor of the Bank of Korea emphasized the need for regulation in the cryptocurrency space.

The FSC’s statement comes as the U.S. Securities and Exchange Commission (SEC) chair Gary Gensler is scheduled to meet his Korean counterpart sometime this month in Washington, DC. The meeting is expected to focus on regulatory issues related to cryptocurrencies and digital assets.

Meanwhile, in the U.S., Vanguard has decided not to offer spot bitcoin ETFs on its platform, including BlackRock’s iShares Bitcoin Trust (IBIT) and Grayscale Bitcoin Trust (GBTC), citing a misalignment with the company’s investment portfolio strategy. The decision highlights the challenges and complexities associated with the approval and listing of bitcoin ETFs in different jurisdictions.