According to local media reports, South Korea's Financial Services Commission (FSC) announced on October 10 the establishment of a virtual asset committee to deal with the approval of spot crypto exchange-traded funds (ETFs) in the country.
This committee will serve as an advisory body aimed at providing comprehensive oversight and guidance to the cryptocurrency industry. It will be led by FSC Vice-Chair Soyoung Kim and include representatives from relevant government departments and nine private sector members.
Additionally, the Virtual Assets Committee will address key issues in South Korea's digital asset sector, such as the authorization of corporate accounts.
Bitcoin (BTC) and other crypto ETFs are prohibited under the current Korean Capital Market Law. Due to anti-money laundering compliance concerns, the ban also applies to corporate accounts of digital assets.
Non-profit organization aimed at user protection
In addition to the new committee, the FSC has established the Digital Asset User Protection Foundation. This is a non-profit organization dedicated to helping users recover assets from service providers that have ceased operations.
The FSC is also reviewing renewal applications for digital asset service providers, with some registrations scheduled to expire in October 2024.
Chairman Kim Byung-hwan, speaking at the National Assembly, reiterated the agency's commitment to developing a robust monitoring system as the law to protect virtual asset users takes effect.
Additionally, the regulator reiterated its focus on investigating vulnerabilities within trade surveillance systems and taking strict action against unfair trade practices.
The FSC will also gradually implement the second phase of the law, which includes further regulations on the business activities of virtual currency service providers, as part of its continued efforts to strengthen the country's virtual currency regulatory framework.
Kimchi premium relaxation
CryptoQuant CEO Ki Yong-ju said spot approval of Bitcoin ETFs in South Korea will minimize the “kimchi premium” by opening the market to arbitrage by mutual funds and market makers. He said that it would be possible.
Kimchi Premium is a term used to address the phenomenon where South Korean cryptocurrency prices are on average higher than other global markets. This is usually due to the high demand for cryptocurrencies in the country compared to other parts of the world.
According to Chainalysis, kimchi premiums fluctuate based on market conditions and regulatory changes, making it a popular metric among traders. When Bitcoin hit a new all-time high in March, Kimchi Premium also hit a new record.
