South Korea’s ruling party backtracks on spot Bitcoin ETF election promise

South Korea’s ruling People Power Party has indefinitely delayed its proposal to ease cryptocurrency restrictions, including lifting the ban on local spot Bitcoin (BTC) exchange-traded funds (ETFs), as per local sources.

According to a report by local media outlet Chosun Biz, the party’s reversal of pledges could be linked to challenges in aligning with the government and financial authorities on cryptocurrency policies.

Earlier this month, there were reports that the governing party was crafting election promises to delay taxing crypto profits and permit domestic institutions to introduce spot Bitcoin ETFs and invest directly in cryptocurrencies.

The People Power Party reportedly removed virtual assets from its policy priorities as the party, led by Yoon Chang-hyun, intended to announce a virtual asset pledge last week but has postponed it indefinitely.

Hong Ik-pyo, Democratic Party floor leader, announces digital asset institutionalization pledge at Yeouido, Seoul’s National Assembly. Source: Chosun Biz

In January, the nation’s financial regulator restated its prohibition, preventing financial institutions from introducing cryptocurrency ETFs and asserting that digital assets do not align with the underlying assets specified in the Capital Markets Act. Local investors currently face limitations on investing in spot crypto ETFs, while foreign crypto futures products remain accessible.

Despite the recent approval of the spot Bitcoin ETF by the United States Securities and Exchange Commission, South Korea’s Financial Services Commission maintains a cautious stance, citing perceived investment risks associated with digital assets.

Meanwhile, the opposition Democratic Party, which had also reportedly vowed similar pledges regarding crypto ETFs, officially announced its crypto campaign promises last week. South Korea’s general election is expected on April 10.

According to the local report, The People Power Party considered a proposal to delay taxation on virtual assets for two years and permit corporate investments in digital assets. However, this plan was not finalized as a pledge due to inadequate consultation with relevant ministries and concerns about potential substantial losses, especially regarding corporate involvement in digital assets.

South Korea’s Financial Supervisory Service (FSS), the primary financial regulator, is set to seek guidance from the U.S. SEC regarding spot Bitcoin exchange-traded funds.

FSS chief Lee Bok-hyun outlined a 2024 business plan, including visits to key financial markets like New York in Q2. The agenda involves discussions on South Korean financial markets, focusing on spot Bitcoin ETFs.

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