April 13, 2021

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Why did South Korea just say ‘no’ to a BTC ETF listing on its stock exchange?

3 min read

A Korean crypto company had ambitious plans to launch a BTC exchange-traded fund (ETF) in the crypto-frenzied market last week. But the move was thwarted by authorities based on a legal stand taken by a foreign country.

The BTC ETF that almost was

Local news outlet Newsway reported this morning that the Korean Stock Exchange (KSX) did not permit the launch of a BTC ETF, stating the lack of digital currency-related products in the US as the reason for the dismissal.

The product would follow BTC’s price movements and intended to allow investors to bet on the asset’s volatility in a regulated fashion, instead of them having to rely on unregulated crypto companies.

For the uninitiated, ETFs are freely traded financial instruments that represent an underlying asset and can be easily accessed by both retail and institutional investors on a stock exchange. They are usually listed via a three-step approach—application, review, approval.

The regulated nature of ETFs makes them attractive to institutional investors, meaning crypto companies have, in the past few years, tried their luck at listing BTC- or other crypto-backed ETFs on traditional stock exchanges.

ETFs and cryptocurrencies are popular financial markets in Korea, but the exchange regulators didn’t see a product that combined the two markets as a prudent choice. As per the report, the exchange said that it was “burdensome to meet the issuer’s request as the government had not yet recognized virtual currency as a cash value.”

Troubles for US ETF hopefuls

The US government has repeatedly, and infamously, shot down ETF efforts by both crypto and traditional companies alike. Cryptocurrencies exist in a legal gray area in the country, with only BTC and ETH (unofficially) recognized as not securities.

Fidelity, one of the world’s largest asset managers, has submitted a preliminary registration document for BTC ETF to the SEC as of last month and is currently awaiting approval.

Van Eck, a US asset management company that listed Van Eck Vector BTC (VBTC), a BTC Listed Index (ETN), on the German stock market in 2019, submitted an application for listing a BTC ETF to the US Securities and Exchange Commission (SEC) on the 15th of last month. It was, however, rejected.

But the interest is growing: legacy institutions like Morgan Stanley and JPMorgan have chalked out plans to offer a BTC ETF to clients, citing high demand.

BTC- and crypto-based financial products are already listed in markets like Canada and Europe, where they enjoy both volumes and popularity. A Canadian firm called Purpose Investments even launched the first-ever BTC ETF ealier this year—and it has proven to be a success with over CA$1.3 billion worth of BTC locked in the shares already.

But for Korea, the BTC ETF story begins when the US finally lists. Or at least that’s how it looks right now.

The post Why did South Korea just say ‘no’ to a BTC ETF listing on its stock exchange? appeared first on CryptoSlate.

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