South Korea’s financial regulators have issued fresh directives requiring domestic asset managers to limit their exposure to crypto-related companies, such as Coinbase and MicroStrategy, within exchange-traded funds (ETFs).
The move, confirmed on July 23, comes as the nation’s Financial Supervisory Service (FSS) seeks to reinforce a longstanding policy restricting institutional investment in virtual assets.
Under the current guidelines, which have been in place since 2017, regulated financial institutions in South Korea are prohibited from directly holding, purchasing, or making equity investments in cryptocurrencies or companies primarily linked to the virtual asset industry.
Despite recent trends toward deregulation in both the United States and South Korea, the FSS emphasized that these restrictions remain enforced until new legislation is formally adopted. The FSS communicated its expectations verbally to asset management firms earlier this month, sparking frustration among local market participants who argue that this directive puts them at a disadvantage compared to retail investors. While retail participants can freely access U.S. ETFs with significant crypto exposure, institutional investors are constrained by domestic regulations.
Industry insiders point out that many South Korean ETFs currently exceed the 10% threshold for exposure to crypto-linked firms, referencing the ACE U.S. Stock Bestseller ETF managed by Korea Investment Management, which holds Coinbase at a 14.59% weighting. Regulators cite growing risks associated with both direct and indirect exposure to crypto assets, particularly in an environment marked by global market volatility.
Meanwhile, South Korea’s stance toward crypto investment is in flux. President Lee Jae-myung and lawmakers have proposed legalizing spot crypto ETFs and establishing regulatory frameworks for won-based stablecoins and digital asset markets. The country has already witnessed a surge in retail crypto investors, with over 16 million South Koreans now holding accounts with domestic exchanges—about 32% of the population, outpacing the nation’s stock investors.
Notably, South Korean prosecutors have launched an investigation into Kim Keon-hee, the former First Lady, examining her possible connections to a notorious cryptocurrency market maker accused of manipulating altcoin prices and committing large-scale financial fraud.
If you want to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.
“Take control of your crypto portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”
