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, which led to a substantial decline in South Korean cryptocurrency concept stocks.
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South Korean Authorities Issue Warning to Securities Firms
South Korean Cryptocurrency Concept Stocks Fall Over 10%
FSC May Open Up After Regulatory Clarity
The US Bitcoin spot ETF officially opened for trading last night, with its first day trading volume exceeding $4.6 billion and the number of trades surpassing 700,000, which is twice that of the Nasdaq 100 Index ETF (QQQ). The crypto community excitedly proclaimed themselves as “stock traders” now.
However, for South Korea, one of the most enthusiastic countries for cryptocurrency investment, its financial regulatory authority, the Financial Services Commission (FSC), issued a sudden statement today, which clearly seems to be a corresponding measure to the approval of the Bitcoin spot ETF by the SEC. This statement has caused major South Korean securities firms, such as Mirae Asset Securities and Samsung Securities, to prohibit their customers from purchasing overseas Bitcoin spot ETFs.
For example, Mirae Asset Securities has temporarily suspended trading of the world’s first Bitcoin spot ETF, the 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 statement was issued, it is now suddenly 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 securities firms concerned that existing foreign Bitcoin ETF trades may be viewed as illegal, hence the suspension.
Note: However, foreign Bitcoin futures ETFs are currently continuing to trade 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 three major Korean exchanges including Upbit, saw its stock price drop by 9.1%, while Hanwha Investment & Securities saw a decline of 14.89%. 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.
On the other hand, Bitcoin futures ETFs were not affected by the FSC statement, so South Korean securities firms continue to allow 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 of this year. Considering that there are already cases of similar products in overseas markets, such as the United States, 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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