US Decision on Bitcoin ETF to Set Tone for Local Crypto Market: Korea Exchange Official

March 8, 2019

Korea Exchange is closely following any US decision on Bitcoin ETFs, looking across the Pacific for how to manage risks in local markets.

The Korea Exchange (KRX), South Korea’s sole securities exchange operator, is paying close attention to the movements of United States regulators regarding Bitcoin (BTC) exchange-traded funds (ETFs), according to an anonymous source cited in a report by local English-language daily The Korea Herald on February 20th.

An ETF is a marketable security that track stock, bonds or other assets proportionately represented in the fund’s shares, which can be bought or sold through a brokerage firm. Some investors regard ETFs as a pathway for cryptocurrencies’ mainstream acceptance as a controlled and manageable investment instrument.

The U.S. Securities and Exchange Commission (SEC) has not made any concrete decisions on the large number of proposed crypto-related ETFs. The source, an official at KRX who spoke on condition of anonymity, said that with the SEC’s review period of a proposal being fixed at April, they will patiently observe the progress and response of the SEC with regards to Bitcoin ETFs. According to the official, the US is seen as a leader in the cryptocurrency market and there is strong support for the launch of Bitcoin ETFs.

KRX is currently looking into creating a solid Bitcoin index, which would be needed to launch such ETFs whenever they become available for commercial purposes and introduced to the market, given the investor protection concerns.

Many local investment banks and asset management firms have already launched their blockchain ETFs in South Korea’s ever-growing blockchain space. The products were listed with relatively little scrutiny from the country’s watchdog, the Financial Supervisory Service (FSS). The FSS is the government body responsible for regulating institutions functioning in the country’s financial services industry.

Lee Kyung-ho, a professor at Korea University’s Graduate School of Information Security, reasoned that the projects are expected to mitigate the risk of introducing ETF transactions into the cryptocurrency market. According to Lee, the ETFs are all the more viable with a blockchain-friendly government that continues to make large investments in the research and development of the technology.

Lee also argued that Bitcoin ETF trading requires an emphasis on robust Know-Your-Customer and Anti-Money Laundering compliance, which Korean authorities have been requiring of domestic crypto exchanges.

When interviewed by Cointelegraph, Brian Kelly — a prominent CNBC commentator, crypto analyst and investor — expressed skepticism about the possible integration of a Bitcoin ETF this year, but was more optimistic about the prospects in 2020.

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