South Korea’s Financial Supervisory Service (FSS) has informally directed local asset managers to scale back their exposure to crypto exchange-traded funds (ETFs) and U.S.-listed digital asset firms, including Coinbase (COIN) and MicroStrategy (MSTR), according to a report from the Korea Herald.
The FSS’s guidance was delivered verbally, urging firms to align with its 2017 policy stance, which prohibits regulated financial institutions from holding or investing in digital asset-related equities. This move comes even as South Korea had previously considered relaxing certain trading rules in the cryptocurrency sector.
Coinbase, Strategy targeted in new advisory
The informal directive specifically advised firms to limit exposure to Coinbase and Michael Saylor’s MicroStrategy, two major U.S. players with deep crypto connections. Despite significant regulatory shifts in both the United States and South Korea, the FSS insists institutions must continue to operate under existing domestic rules.
An FSS official clarified that while the broader regulatory landscape has evolved, institutions remain bound by current guidelines. “Until our policy officially changes, the existing framework must be respected,” the official said, as reported by Korea Herald.
Policy at odds with global trends
The advisory appears to conflict with earlier signals that South Korea might ease crypto rules to promote innovation. Analysts note the country’s crypto stance has been cautiously progressive, and this sudden warning could dampen market sentiment among institutional investors.
Still, the FSS has not issued formal enforcement, leaving room for further policy developments. For now, South Korea’s asset managers are navigating a conflicting environment one where international momentum in crypto adoption contrasts sharply with local regulatory conservatism.