The Democratic Party of Korea has urged financial authorities to actively participate in establishing a regulatory framework for virtual assets, including the introduction of a Bitcoin Exchange-Traded Fund (ETF). The party argues that, in order not to fall behind in the global virtual asset market, speed is more important than caution.
On July 30, the Korea Fintech Industry Association announced that it held the 5th National Assembly Forum for the enactment of the Digital Asset Innovation Act at the National Assembly Members' Office Building in Yeouido, Seoul. The event was themed "Korean-Style Bitcoin Spot ETF: Innovation in Digital Assets and Capital Markets." The forum was hosted by Democratic Party members of the National Assembly's Political Affairs Committee and organized by the Korea Fintech Industry Association.
"The Institutionalization of Virtual Assets Must Proceed at a Rapid Pace"
Democratic Party lawmaker Min Byungdeok stated, "Saying we should be cautious but then not taking the next steps amounts to a dereliction of duty," emphasizing, "The financial authorities must present a proposal."
Min also stressed, "A tsunami called digital assets is now approaching," adding, "To survive, we must ride this tsunami, so we need to review the legislation both cautiously and quickly."
He further emphasized that, in order to vitalize the virtual asset industry, it is necessary to break away from existing perspectives and adopt a new viewpoint. He remarked, "When we try to see things only from the perspective of traditional financial products or currency, we fail to recognize what is new," and added, "We must move away from past ways of thinking and quickly bring these discussions into the public sphere."
Democratic Party lawmaker Lee Kangil also stressed the need to act swiftly to secure a mainstream position in the virtual asset industry. He explained, "Even if Korea secures just a 5% or 10% share of the virtual asset market, we may not be at the very center, but to maintain a position close to the mainstream, we must enhance our acceptance of this sector before it is too late."
Bitcoin Spot ETF... The Need to Establish Index Calculation Guidelines
At the forum, Kim Junyoung, an attorney at Kim & Chang, gave a presentation on "Key Issues and Implications" under the theme "Tasks for Virtual Asset ETFs."
Attorney Kim explained that, in order to create a Bitcoin spot ETF, virtual assets must first be recognized as underlying assets. He emphasized, "There must be explicit grounds for trustees to hold virtual assets and to delegate part of the custody and management to virtual asset service providers."
He added, "Even if a trustee operates based on a license, the custody and management of virtual assets require a separate license under virtual asset regulations," and noted, "There is ongoing discussion in practice about whether both licenses are required or if only one is necessary."
Next, Kim Namho, head of the department at Mirae Asset Global Investments, presented on "Promoting Bitcoin Spot ETFs and Challenges to Resolve." He explained that it is necessary to establish clear guidelines for index calculation. He said, "When calculating the Bitcoin index, there are options to benchmark domestic markets, overseas markets, or a mix of both," and added, "To determine whether the price is appropriate and whether it has credibility and objectivity, clear guidelines must be established."
He continued, "A Bitcoin spot ETF is a comprehensive product that spans all areas of the Capital Markets Act and the Digital Asset Basic Act," emphasizing, "To ensure the successful settlement of Bitcoin spot ETFs, it is more important than ever to resolve policy uncertainties and enhance the trust of market participants."
Lee Hyoseop, senior researcher at the Capital Market Research Institute, stated, "If a Bitcoin spot ETF is introduced, there are concerns about high price volatility, potential threats to financial stability, and a contraction in the supply of venture capital," but added, "On the other hand, it is expected to expand investment opportunities and alleviate the Kimchi Premium."
However, he pointed out that consumer protection is a critical factor. He emphasized the need to improve exchange infrastructure for this purpose. He said, "Efforts are needed to minimize tracking error disparities by selecting and assigning responsibility to various liquidity providers (LPs)," and added, "It is also necessary to expand investor education through increased education and outreach on the risks, suitability, and appropriateness principles of Bitcoin, as well as on diversification and the suppression of leveraged investments."
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