South Korea’s Financial Services Commission (FSC) announced the creation of a Virtual Asset Committee to address the approval of spot crypto exchange-traded funds (ETFs) in the country on Oct. 10, according to local media reports.
The committee will act as an advisory body designed to provide comprehensive oversight and guidance for the crypto industry. It will be led by the FSC Vice Chairman, Soyoung Kim, and includes representatives from related government departments and nine private sector members.
Additionally, the Virtual Asset Committee will address key issues in the South Korean digital asset sector, including the authorization of corporate accounts.
Bitcoin (BTC) and other crypto ETFs are banned under the current South Korean Capital Markets Act. The prohibition extends to corporate accounts for digital assets due to concerns surrounding anti-money laundering compliance.
Non-profit for user protection
In addition to the new committee, the FSC has established the Digital Asset User Protection Foundation, a non-profit organization designed to assist users in recovering assets from service providers that have ceased operations.
The FSC is also reviewing renewal applications for digital asset service providers, with some registrations set to expire in October 2024.
Chairman Kim Byung-hwan, addressing the National Assembly, reiterated the agency’s commitment to developing a robust monitoring system as the law protecting virtual asset users takes effect.
Furthermore, the regulator reiterated its focus on investigating vulnerabilities within the trading monitoring system and enforcing strict measures against unfair trading practices.
The FSC also plans to gradually implement the second phase of legislation, which includes further regulations on the business activities of crypto service providers, as part of its ongoing effort to enhance the regulatory framework for crypto in the country.
Easing the Kimchi premium
CryptoQuant CEO Ki Young Ju said the spot Bitcoin ETF approval in South Korea will minimize the “Kimchi premium” by opening the market to arbitrage mutual funds and market makers.
Kimchi premium is a term to address the phenomenon when crypto prices in South Korea average higher than the rest of the global markets. This is usually caused by a higher demand for crypto within the country compared to the rest of the world.
According to Chainalysis, the Kimchi premium fluctuates based on market conditions and regulatory changes, making it a popular indicator among traders. When Bitcoin reached a new all-time high in March, the Kimchi premium also registered a new record.