[Exclusive] Korea's First 'Virtual Asset Spot ETF' Listing Underway

PVR Group Proposes Virtual Asset Spot ETF Listing Project to Busan City
Seeking Financial Services Commission Approval Without Legal Amendments

In South Korea, the listing of cryptocurrency spot exchange-traded funds (ETFs) such as Bitcoin, Ethereum, Solana, and Ripple is also being promoted.

According to the financial investment industry on the 7th, PVR Group submitted a business proposal to Busan Technopark, a public institution under Busan City, focusing on the listing of cryptocurrency spot ETFs and K-content token trading as key contents for major projects and regulatory exemptions in the blockchain regulatory sandbox. Busan Technopark is the institution responsible for major projects in the Busan City blockchain regulatory sandbox.

Based on business proposals received from 16 operators including PVR Group, Busan City plans to hold a general meeting this month to discuss major projects and regulatory exemptions for the blockchain regulatory sandbox.

PVR Group’s plan is to first actively utilize the status of the Busan City blockchain regulatory sandbox to obtain approval for a demonstration exemption without amending the Capital Markets Act. They aim to promote the listing of cryptocurrency ETFs in a testbed format. This demonstration method is the most promising way to list cryptocurrency spot ETFs under the current financial investment system, as it only requires approval from the Financial Services Commission. If the demonstration exemption is not granted in the regulatory sandbox, they plan to apply directly to the Financial Services Commission through the regulatory sandbox as a second step.

Previously, financial authorities issued a legal interpretation stating that Bitcoin spot ETFs are not financial investment products under current law. Since cryptocurrencies are not included as underlying assets eligible for investment under the Capital Markets Act, listing and trading them could violate the law. However, this regulatory approach somewhat diverges from global investment trends. In major overseas countries such as the United States, Canada, Switzerland, Brazil, Germany, and Hong Kong, cryptocurrency spot ETFs are listed and traded with regulatory approval.

In South Korea, the Cryptocurrency User Protection Act will be enforced starting this month, and the Financial Services Commission is expected to actively discuss the establishment of cryptocurrency spot ETFs. Recently, Jin Bokhyun, Governor of the Financial Supervisory Service, visited the U.S. Securities and Exchange Commission (SEC) and met with Chairman Gary Gensler to exchange views on the background of Bitcoin spot ETF approval.

During this public discussion process, PVR Group plans to conduct demonstration projects, monitor cryptocurrency spot ETF trading, address issues, and support legislation. Specifically, they plan to request approval from financial authorities for a demonstration exemption to include four cryptocurrencies?Bitcoin, Ethereum, Solana, and Ripple?as underlying assets under Article 4 of the Capital Markets Act. Additionally, they will request approval for a demonstration exemption allowing ETFs based on these four cryptocurrencies as underlying assets to be managed as collective investment assets under Article 229 of the Capital Markets Act concerning special asset-type collective investment schemes.

Possibility of Cryptocurrency ETF Trading from Early Next Year

If PVR Group’s plan proceeds as intended, investors will be able to open accounts for cryptocurrency ETF trading and invest as early as the beginning of next year. Investors will submit buy and sell orders for ETF units on the exchange and will be able to check and manage their ETF portfolio assets in real time.

Jin Hyunsoo, CEO and lead attorney at the cryptocurrency-specialized Decent Law Office, said, "If this proceeds as a demonstration exemption project, it will be allowed temporarily, limitedly, and experimentally without changing the law itself, so it can progress quickly. Since cryptocurrency investment will be conducted through securities firms and asset managers, it will become more popular and positively impact security and professional personnel aspects."

A senior official from PVR Group said, "It is a reasonable procedure for cryptocurrency demonstration exemption project operators to participate in future cryptocurrency legislation and public discussions, monitor cryptocurrency spot ETF trading through demonstrations, address issues, and then support legislation. Not only experts and industry insiders but also the entire domestic investment market regard this as an important issue. If the demonstration exemption is not allowed, we will explore additional alternatives."