Introduction of Spot Bitcoin ETFs in South Korea
South Korea is set to launch spot Bitcoin ETFs this year as part of its 2026 Economic Growth Strategy. The Financial Services Commission (FSC) is also hastening the implementation of phase-two digital asset legislation aimed at creating a comprehensive regulatory framework for stablecoins.
Reasons for Policy Changes
The government has pointed to the active trading of spot Bitcoin ETFs in markets such as the United States and Hong Kong as a significant rationale for permitting similar products domestically. Previously, there were restrictions preventing digital assets from being used as underlying assets for exchange-traded funds.
Financial Market Reforms
This initiative is part of broader financial market reforms intended to attract foreign investment and facilitate South Korea’s long-sought upgrade to the MSCI’s developed-market index. Vice Finance Minister Lee Hyoung-il stated that the government aims to create a roadmap for internationalizing the won, thereby increasing its accessibility and demand.
Expansion of Foreign Exchange Trading
Additionally, the government plans to allow 24-hour onshore foreign exchange trading starting in July 2026. The push for spot ETFs follows Korea Exchange Chairman Jeong Eun-bo’s commitment in January to introduce crypto products, although the development of comprehensive digital asset legislation remains stalled due to disagreements over stablecoin governance between the FSC and the Bank of Korea.
Disputes Over Stablecoin Governance
The central bank argues that stablecoins should only be issued by bank-led consortiums with a minimum ownership stake of 51% from lenders, while the FSC warns this approach may exclude technology firms and hinder innovation in payment systems. Regulators also differ on whether new oversight committees for stablecoins are necessary.
Regulatory Uncertainty and Enforcement Actions
Despite the ongoing stalemate, the FSC’s phase-two bill is anticipated to include provisions for issuer authorization, capital requirements, reserve asset management, and redeemability of stablecoins. At the same time, the Financial Intelligence Unit has intensified enforcement actions, imposing fines for anti-money laundering violations on several exchanges, including Korbit.
Broader Economic Outlook
The spot ETF initiative aligns with President Lee Jae-myung’s policy agenda to eliminate the “Korea discount” and enhance domestic market valuations. The government forecasts a 2% economic growth rate for this year, driven by improved domestic consumption and stronger semiconductor exports, along with a projected current account surplus expected to rise significantly by 2026.
