Following the U.S. Securities and Exchange Commission (SEC)'s announcement of approval of a spot Bitcoin exchange-traded fund (ETF), Bitcoin ETFs began trading on the U.S. stock market from January 10, 2024. However, the Domestic Financial Services Commission has determined that spot ETFs may violate the current Capital Markets Act and is strengthening regulatory measures, including banning domestic securities firms from purchasing them.

Domestic corporations that wanted to invest in cryptocurrency (virtual assets) were faced with a new means of investing in Bitcoin by recently receiving approval for a spot ETF. Until then, companies that were concerned about direct investment due to regulatory and legal gaps were choosing other indirect investment methods, such as stocks of Coinbase (NASDAQ, COIN), an exchange listed on NASDAQ. But now that Bitcoin spot ETFs are trading on the stock market, companies have a new investment option.

However, not only has a Bitcoin spot ETF not been launched in Korea, but it is also impossible to invest in a spot ETF even through a securities company that can purchase overseas stocks. This can be understood by looking at how regulations on cryptocurrency have been implemented in Korea.

Starting with the government's ‘Emergency Measures Related to Virtual Currencies’ announced in December 2017, an official ban on initial coin offerings (ICOs) of cryptocurrency was announced in Korea, and a plan to implement emergency measures related to virtual assets was announced. Soon, the practice of corporations establishing ghost corporations overseas and conducting ICOs indirectly became widespread, and there was no provision in domestic law to directly punish ICOs. In response to this, the government strengthened regulations by urging the establishment of an information protection management system and identity verification system for indirect regulation.

In 2018, the Financial Services Commission announced the 'Real Name System for Virtual Asset Transactions' and took measures to ban commercial banks from providing accounts for virtual asset transactions. In response, investors confirmed to the Constitutional Court that the Financial Services Commission's ban on providing accounts was unconstitutional. I filed a petition asking for the constitution. However, the constitutionality decision was made, and controversy began over the fact that the ‘real-name virtual asset transaction system’ was implemented without National Assembly legislation.

In 2021, the Specific Financial Information Act was revised and measures were taken to strengthen customer verification obligations so that virtual asset exchanges can only trade if they have a real-name account through a bank, and with the implementation of the travel rule, domestic exchanges have strengthened customer verification. measures had to be strengthened.

Subsequently, in 2023, the Virtual Asset User Protection Act will be implemented and the provisions prohibiting illegal securities trading under the Capital Markets Act will be expanded to suit the virtual asset market. As the current Capital Markets Act fails to regulate virtual assets during the legislative process of the National Assembly, this will lead to this. The law was enacted to take action to address the problems that arise.

Lastly, in 2024, the Domestic Financial Services Commission will take regulatory measures on spot ETFs, but due to the lack of legal basis for this, as government-led regulations increase, authoritarian principles may not be respected or individual freedoms may be seriously violated. Concerns have been raised that

Through this process, we can see that regulations on cryptocurrency are gradually being strengthened in Korea. In response, despite the creation of new means for domestic companies to invest in spot ETFs, they are unable to continue investing due to existing regulations in Korea.