South Korea is preparing to reverse its long-standing opposition to spot bitcoin exchange-traded funds (ETFs), marking a major policy shift as the country accelerates a broader push to modernise its cryptocurrency regulatory framework, according to officials and industry sources cited by CoinDesk.
For years, South Korea’s Financial Services Commission (FSC) has blocked spot crypto ETFs, arguing that bitcoin and other digital assets were not suitable as underlying assets for regulated financial products. That position now appears to be softening amid growing political pressure, global regulatory trends and the rapid institutionalisation of crypto markets.
Officials familiar with ongoing policy discussions say regulators are reassessing their stance following the successful launch and strong investor demand for spot bitcoin ETFs in the United States and other jurisdictions. The FSC is reportedly reviewing whether existing capital markets laws can be interpreted more flexibly or amended to accommodate crypto-backed ETFs without undermining investor protection.
The policy rethink is part of a wider crypto reform drive led by South Korea’s government, which has increasingly framed digital assets as a strategic financial and technological sector rather than a speculative fringe market. Authorities are working on the second phase of the country’s Virtual Asset User Protection Act, which is expected to address market manipulation, disclosure standards, token issuance rules and the role of institutional investors.
Lawmakers across party lines have also pushed for reforms after digital assets emerged as a key issue for younger voters. South Korea has one of the world’s most active retail crypto markets, with local exchanges handling billions of dollars in daily trading volumes during peak cycles. Industry leaders argue that banning spot ETFs has pushed capital offshore while depriving domestic investors of regulated exposure.
While futures-based crypto products linked to overseas ETFs have been allowed in limited forms, direct spot bitcoin ETFs remain prohibited. Regulators have historically cited concerns over price manipulation, custody risks and market volatility. However, sources say officials are now studying custody models, surveillance mechanisms and investor safeguards used in the US and Europe.
If approved, bitcoin ETFs would allow South Korean asset managers and pension-linked funds to gain exposure to bitcoin through traditional brokerage accounts, potentially unlocking significant institutional demand. Analysts say this could also accelerate discussions around Ethereum ETFs and other digital-asset-linked products over time.
The FSC has not yet announced a formal timeline, and any approval would likely require coordination with the Ministry of Economy and Finance as well as potential legislative adjustments. Still, the shift in tone alone is being interpreted by markets as a clear signal that South Korea intends to remain competitive as global financial centres race to integrate crypto into regulated finance.
For now, regulators stress that investor protection remains the priority. But the message is clear: South Korea’s once-hardline position on bitcoin ETFs is no longer set in stone.
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