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 issued a statement prohibiting domestic securities firms from acting as agents for 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 Securities Firms
South Korean Cryptocurrency Concept Stocks Fall by Over 10%
FSC May Open up After Regulatory Clarity
The Bitcoin spot ETF in the United States officially opened for trading last night, and its first-day trading volume exceeded $4.6 billion, with over 700,000 transactions. This is twice the volume of QQQ (Nasdaq 100 Index ETF), and the cryptocurrency community excitedly claims to be “stock traders” now.
However, for South Korea, one of the countries most enthusiastic about investing in cryptocurrencies, its financial regulatory authority, the Financial Services Commission (FSC), issued a sudden statement today, which is clearly a corresponding measure in response to the approval of the Bitcoin spot ETF by the SEC. This statement has led several major South Korean securities firms, such as Mirae Asset Securities and Samsung Securities, to prohibit customers 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 securities firms was feasible before the FSC issued its statement, it is now suddenly suspended due to intensified regulatory pressure.
A spokesperson for Mirae Asset Securities revealed to The Block that the latest statement from the FSC has made securities firms worried that existing foreign Bitcoin ETF transactions may be deemed illegal, hence the temporary suspension.
Note: However, foreign Bitcoin futures ETFs are still trading on multiple platforms as they have not been warned by the FSC.
Possibly affected by this news, South Korean cryptocurrency concept stocks all experienced significant declines today. Woori Technology Investment, which holds shares of Dunamu, the operator of the three major South Korean exchanges Upbit, saw its stock price drop by 9.1%, and Hanwha Investment & Securities fell by 14.89%. T Scientific, which holds shares of Bithumb, and its parent company Wizit also saw their stock prices decline by 11.7% and 16.76% respectively.
(Image)
Chart of Woori Technology Investment’s stock price today. Source: Yahoo Finance
On the other hand, Bitcoin futures ETFs have not been affected by the FSC’s statement, so South Korean securities firms continue to offer trading of 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 take effect in July this year. Considering the existence of related products in overseas markets such as the United States, South Korea plans to conduct further reviews of these products and does not rule out the possibility of opening up trading of overseas-listed Bitcoin spot ETFs in the future.
Related Reading:
Cracking Down on Pump and Dump! South Korea to Introduce “Virtual Currency Listing and Delisting” Guidelines
(Image)
Related Reports
Strengthening Regulations! South Korea’s FSC to Introduce “Class Action New Law” to Enhance Investor Protection in Virtual Currencies
Cracking Down on Pump and Dump! South Korea’s Financial Supervisory Service to Propose “Virtual Currency Listing and Delisting” Exchange Guidelines
The Dream of Getting Rich in South Korea’s Cryptocurrency Market: In-Depth Analysis of the Coin Trading Culture Behind Kimchi Premium!