South Korea lays out roadmap for ETFs, probes exchange fees

Getting your Trinity Audio player ready...

In a busy week for South Korea’s top finance sector regulator, the Financial Services Commission (FSC), it met with the country’s new administration to submit a roadmap to approve local spot digital asset exchange-traded funds (ETFs) and proposed an investigation into transaction fees charged by domestic digital asset exchanges, according to local media reports.

U-turn on spot crypto EFTs

South Korea’s new President, Lee Jae-myung, who swept to office after a June 3 snap election, is already beginning to follow through on his pre-election pro-crypto pledges, including lifting the domestic ban on spot digital asset ETFs.

These products, the subject of much debate and frenzied activity in the United States over the past few years, have been banned in South Korea since 2017 under the country’s Capital Markets Act, which limits the scope of ETFs to financial investment instruments, currencies, and ordinary commodities—categories in which digital asset are not included.

However, in line with the new president’s zeal for digital asset products, the FSC has submitted a plan to the State Affairs Planning Committee—a presidential transition team for the Lee administration—in which the regulator said it would prepare implementation measures for spot digital asset ETFs in the second half of this year, according to a June 19 report from local outlet Yonhap News Agency.

The roadmap also reportedly includes preparing rules to lift the ban on Korean won-based stablecoins. This would align with another of Lee’s first acts as President, earlier in June, to introduce the Basic Digital Asset Act, which allows local stablecoins issuance whilst relaxing rules for digital asset exchanges.

Following Thursday’s media reports of its proposed roadmap, the FSC issued a statement clarifying that the details of its filings to the planning Committee are not confirmed and “have not been finalized.”

On Thursday, the Herald Economy reported that the FSC will be launching a probe into transaction fees imposed by local trading platforms, as part of President Lee’s pro-crypto agenda.

According to the report, the FSC briefed the State Affairs Planning Committee on its plan to investigate digital asset exchange fees.

“We need to examine whether the current fees of domestic exchanges are an excessive burden on consumers and whether they are at an appropriate level compared to overseas cases,” an FSC official reportedly said.

South Korea has one of the largest digital asset adoption rates in the world, ranking 19th globally based on 2024 data from blockchain analytics platform Chainalaysis. FSC data from last year also estimated South Koreans held around 104 trillion won ($75.7 billion) worth of digital assets.

In order to support this booming market in the run-up to the election, President Lee pledged that he would lower digital asset transaction fees from the current 0.05% to 0.015%. According to Maeil Business Newspaper, Lee said this plan aimed to support young traders to “grow their assets and live without worries.”

The FSC has taken up this challenge and, as part of the its examination into transaction fees, the regulator will be conducting a survey of digital asset exchanges on their current fee systems, charging methods and collected amounts, reported the Herald Economy. The survey is expected to focus on major domestic exchanges such as Bithumb, Upbit, and Coinone.

An FSC official told the local outlet that the regulator had not yet set a target commission rate and that it would establish policy standards “through comparisons between domestic and foreign exchanges and analysis of user convenience.”

Watch: ASK ME ANYTHING! CoinGeek Weekly Livestream with Kurt Wuckert Jr.