The Korea Exchange (KRX), which handles South Korea’s stock and derivatives exchange, wants to add more new financial products, like derivatives and crypto exchange-traded funds (ETFs).The plan is part of a larger effort to modernise the capital markets.
At the first trading day ceremony of the new year, KRX chairman Jeong Eun-bo said that the exchange was ready to offer crypto ETFs, even if authorities were still deciding whether or not to allow these kinds of products under current securities laws.
Jeong said that the move was part of South Korea’s efforts to get rid of the “Korea Discount,” which is when domestic equities are worth less than those from around the world. In the world of cryptocurrency, on the other hand, Bitcoin generally trades at a higher price on local markets than on international ones. He also discussed other projects, like moving towards 24-hour trading and getting ready for digital finance.
The New Year’s speech didn’t disclose any new regulatory approvals, but it did point out that market operators and authorities are working together more as the government decides if crypto can be used in its traditional banking system.
Infrastructure progresses amidst regulatory uncertainty
KRX’s statements came as South Korean regulators were still looking into the legality of investment products based on cryptocurrencies.
Because of the way the rules are set up right now, crypto assets can’t be used as underlying assets for securities. This means that crypto-based ETFs can’t be made, even if more and more people want them.The Financial Services Commission had already announced that it was looking into possible changes through a special crypto committee. One of the things they were looking at was whether digital assets might be recognised under the Capital Markets Act.
While authorities think about these choices, KRX’s messages suggest that market infrastructure may no longer be a problem. The exchange is getting ready to move rapidly whenever regulatory hurdles are resolved by openly saying that it is ready to list and trade crypto-linked products. Growing Political and Industry Support for Crypto ETFs
Over the past year, more and more people in the country’s business and political circles have been supporting crypto ETFs. In February, the chairman of the Korea Financial Investment Association (KOFIA) indicated that the industry would work to have Bitcoin and Ether ETFs listed in Korea to accommodate the growing demand from investors who want regulated access to crypto.