The Bitcoin spot ETF in the United States attracted significant attention on its first day of trading. However, the Financial Services Commission (FSC) of South Korea released a statement prohibiting domestic brokerages from representing overseas-listed Bitcoin spot ETFs, leading to a sharp decline in South Korean cryptocurrency concept stocks.
(Table of Contents:
South Korean authorities issue warning to brokerages
South Korean cryptocurrency concept stocks fall over 10%
FSC may open after regulatory clarity
)
The US Bitcoin spot ETF officially began trading last night, with the trading volume on the first day surpassing $4.6 billion and the number of transactions exceeding 700,000, which is twice that of the QQQ (Nasdaq 100 Index ETF). The crypto community excitedly proclaimed themselves as “stock traders” now.
However, for South Korea, one of the countries most enthusiastic about investing in cryptocurrencies, the Financial Services Commission (FSC) issued a sudden statement today, which clearly targeted the approval of the Bitcoin spot ETF by the SEC. This statement has caused major South Korean brokerages, such as Mirae Asset Securities and Samsung Securities, to prohibit their clients from purchasing overseas Bitcoin spot ETFs.
For example, Mirae Asset Securities has temporarily suspended trading of the world’s first Bitcoin spot ETF, “Purpose Bitcoin ETF” (BTCC), which was listed on the Canadian Securities Exchange as early as February 2021. Although trading through domestic brokerages was feasible before the FSC statement, it has suddenly been suspended due to increased regulatory pressure.
A spokesperson for Mirae Asset Securities revealed to The Block that the latest statement from the FSC has made brokerages concerned that existing foreign Bitcoin ETF transactions may be deemed illegal, hence the temporary suspension.
Note: However, foreign Bitcoin futures ETFs are still being traded on multiple platforms as they were not mentioned in the FSC’s warning.
Possibly influenced by this news, South Korean cryptocurrency concept stocks all experienced significant declines today. Woori Technology Investment, which holds shares in Dunamu, the operator of the three major South Korean exchanges, and Hanwha Investment & Securities, saw their stock prices drop by 9.1% and 14.89% respectively. T Scientific, which holds shares in Bithumb, and its parent company Wizit also saw their stock prices fall by 11.7% and 16.76% respectively.
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On the other hand, Bitcoin futures ETFs were unaffected by the FSC’s statement, and South Korean securities companies continue to trade these products.
At the same time, the FSC mentioned in its statement that regulations regarding virtual assets are still being formulated, including the “Virtual Asset User Protection Act” which will come into effect in July this year. Considering that overseas markets, such as the United States, already have similar products, South Korea plans to further review these products and does not rule out the possibility of opening up trading for overseas-listed Bitcoin spot ETFs in the future.
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