South Korea’s People Power Party Revises Bitcoin ETF Pledges

The People Power Party of South Korea has announced an indefinite postponement of its campaign promises to ease cryptocurrency restrictions, including a significant proposal to lift the ban on local spot Bitcoin exchange-traded funds (ETFs).

This decision represents a change from the party’s earlier intentions to liberalize the country’s stringent cryptocurrency regulations, as reported by local news outlet Chosun Biz.

Regulatory Challenges and People Power Party Positions

Earlier this month, the People Power Party declared it was preparing to introduce measures to delay taxation on crypto gains and allow domestic institutions to launch spot Bitcoin ETFs and directly invest in cryptocurrencies. However, the party has now decided to remove virtual assets from its policy priorities, citing difficulties in coordinating crypto policies with government and financial authorities.

In January, the Financial Services Commission of South Korea reiterated its stance against financial institutions’ launch of cryptocurrency ETFs, aligning digital assets outside the regulatory framework of the Capital Markets Act. This reassertion has maintained the restrictions on local investors from engaging in spot crypto ETFs, though foreign crypto futures products remain accessible.

This policy reversal comes amid preparations for South Korea’s upcoming general election on April 10, with the opposition Democratic Party also making pledges regarding regulating crypto ETFs. 

Despite the global trend towards adopting crypto financial products, such as the approval of a spot Bitcoin ETF by the United States Securities and Exchange Commission, South Korea maintains a cautious approach towards cryptocurrency investments due to perceived risks.

The People Power Party had considered delaying taxation on virtual assets for two years and allowing corporate investments in digital assets.  However, these plans have been shelved due to lacking consultation with relevant ministries and concerns over potential losses, especially in corporate involvement in digital assets.