South Korea’s KODA sees a 250% rise in its cryptocurrency holdings on anticipation of a spot Bitcoin ETF. The SEC’s approval of Bitcoin spot ETFs in January stoked enthusiasm in the global cryptocurrency market. South Korea’s SFS Governor will discuss cryptocurrency regulations with SEC’s Gary Gensler.
Korea Digital Asset (KODA), South Korea’s leading institutional cryptocurrency custodian, reported a nearly 250% increase in its crypto assets under custody in the second half of 2023.
This rise is closely related to the growing enthusiasm over the possible launch of local spot Bitcoin exchange-traded funds (ETFs).
Cryptocurrencies: Why South Korea Expects Local Bitcoin Spot ETFs
According to IBT, KODA crypto assets rose to approximately 8 trillion Korean won (~$6 billion), up from approximately 2.3 trillion Korean won (~$1.7 billion) at the end of the first half of the year.
Furthermore, this rise in cryptocurrency holdings coincided with a global uptick in enthusiasm in the cryptocurrency market. This was mainly due to the US Securities and Exchange Commission’s (SEC) moves to approve spot Bitcoin ETFs.
Before the SEC’s approval, the Bitcoin price had already skyrocketed 40%. Following the SEC’s approval of 11 Bitcoin spot ETFs, Bitcoin’s value continued to climb, surpassing the $50,000 milestone.
Additionally, KODA has consolidated its presence in the market by managing more than 200 cryptocurrency wallets and serving around 50 corporate customers. As of mid-2023, the company had a local market share of 80%, KODA said, citing a Korea Financial Intelligence Unit report.
Separately, South Korea’s Financial Supervisory Service (FSS) has revealed upcoming talks between its governor, Lee Bok-hyun, and SEC chief Gary Gensler. These talks, planned for the second quarter of 2024, will focus on the regulation of virtual assets and the potential for spot Bitcoin ETFs.
Aside from a meeting with the SEC chair, Lee is also expected to visit major financial markets in the U.S. such as New York.
Bitcoin Spot ETFs as a Driver of Crypto Holdings
The above indicates a forward-looking approach to cryptocurrency regulation and international cooperation.
However, South Korea’s Financial Services Commission (FSC) has urged local securities firms to exercise caution. Participating in Bitcoin ETFs listed abroad could conflict with current guidelines on virtual assets and the Capital Markets Act.
Cryptocurrencies: The Effect of Bitcoin Spot ETFs
Said caution reflects a balanced stance towards the adoption of crypto innovations, while ensuring regulatory compliance.
“Domestic securities firms that broker foreign-listed Bitcoin ETFs may violate the government’s current stance on virtual assets and the Capital Markets Act,” the FSC said.
Meanwhile, South Korea’s ruling People Power Party is considering allowing investments in crypto products approved by developed countries, including spot Bitcoin ETFs. This measure could represent a significant change in the country’s investment environment, affecting more than 11 million cryptocurrency users.
At the same time, South Korea is preparing to implement strict cryptocurrency regulations. The Virtual Asset User Protection Law, in force since July 2024, aims to crack down on illicit cryptocurrency activities, and introduces severe penalties for serious violations, including life imprisonment. This underlines South Korea’s commitment to a safe and orderly cryptocurrency market.
If a local spot Bitcoin ETF is approved in the country, Cho Jin-seok, KODA’s CEO, believes that the company will play a “key infrastructure role” in the institutionalization of digital assets. Cho Jin-seok believes that the company will play a “key infrastructure role” in the institutionalization of digital assets.
By Audy Castaneda
