[Bitcoin Now] "Spot Bitcoin ETF Is Coming to South Korea"

US Spot Bitcoin ETF Grows Rapidly in 18 Months
Market Cap Reaches $152 Billion by July
K-Bitcoin Spot ETF Introduction Gains Momentum
Included in President Lee Jaemyung's Digital Asset Pledge
Capital Markets Act Amendment Accelerates Ref

Since the launch of the first spot Bitcoin ETF in the United States in January last year, the market capitalization has surged to 152 billion dollars as of last month. In South Korea, where only Bitcoin futures ETFs are currently available, discussions on improving related laws and regulations are also progressing.

On August 14, Kiwoom Securities released a report titled "K-Spot Bitcoin ETF Is Coming," diagnosing that the introduction of a spot Bitcoin ETF in South Korea would help limit the outflow of domestic capital overseas, among other effects.

Yonhap News Agency

US Spot Bitcoin ETF Sees Explosive Growth in Just 18 Months

Before the United States, spot Bitcoin ETFs had already been launched in regions such as Europe and Canada. In the US, it took ten years after the first proposal was submitted to the Securities and Exchange Commission (SEC) before trading of 11 spot Bitcoin ETFs began in January last year. As of the end of last month, the assets under management had soared to 152 billion dollars, including 85 billion dollars for BlackRock's IBIT. Previously, it took IBIT just 50 days to surpass 10 billion dollars, a much faster pace compared to 9.3 months for the Nasdaq ETF QQQ and 27 months for the first gold spot ETF, GLD.

The launch of spot Bitcoin ETFs in the US has reshaped the global virtual asset and capital markets landscape. It has triggered structural changes across the capital market, including improved investment accessibility through "institutionalization of virtual assets," increased liquidity and price stability due to inflows of institutional funds, diversification of asset allocation options, and enhanced investor protection systems. Following this, the SEC's swift approval led to the introduction of spot Ethereum ETFs in July last year and spot altcoin ETFs in July this year in the US.

K-Spot Bitcoin ETF Introduction Becoming More Likely

Currently, domestic individual investors can trade global listed Bitcoin futures such as BITO or blockchain-related equity ETFs like BLOK. According to the Korea Securities Depository, many crypto-related stocks are included among the top 50 net purchases of US stocks by domestic investors. However, trading of spot ETFs is still blocked under current laws and regulations.

However, a shift has been detected since the Democratic Party included a pledge to "allow the issuance, listing, and trading of spot ETFs based on Bitcoin and other assets" as part of its digital asset policy ahead of the presidential election. In June, the Democratic Party led the introduction of the Digital Asset Basic Act and amendments to the Capital Markets Act. The amendment to the Capital Markets Act lays the institutional groundwork by including: ▲ "virtual assets designated and announced by the Financial Services Commission" as underlying assets for financial investment products, ▲ expanding the scope of trust property to include virtual assets, and ▲ allowing trustees to delegate custody to virtual asset service providers (VASPs) with professional expertise.

However, numerous regulatory challenges remain. First, corporations must be allowed to hold virtual assets. In addition, a comprehensive institutional infrastructure is needed, including the development of underlying indices, custody infrastructure, liquidity provision and hedging tools, and investor protection measures. If these prerequisites are resolved, preparations are expected to accelerate among exchanges, banks, asset management companies, and securities firms.

Kim Jinyoung, an analyst at Kiwoom Securities, stated, "The launch of a domestic spot Bitcoin ETF will trigger structural changes across the capital market by improving investment accessibility through the institutionalization of virtual assets, increasing liquidity and price stability with inflows of institutional funds, diversifying asset allocation options, and strengthening investor protection systems. In addition, South Korea can expect not only to expand the ETF market but also to limit the outflow of domestic capital overseas, build infrastructure at a global level, broaden the investment base, ease the K-premium, and accelerate capital market innovation."