South Korea's financial regulatory body, the Financial Supervisory Service (FSS), has tightened its restrictions on cryptocurrency by rejecting the launch of exchange-traded funds (ETFs) that track companies linked to digital assets. The FSS cited a 2017 government directive as the basis for its decision to bar asset managers from introducing ETFs focused on firms like Coinbase. This follows a previous ban on Bitcoin spot and futures ETFs due to the South Korean Capital Markets Act. The FSS's decision has put domestic asset managers on hold, with regulatory approval being a requirement to move forward with a Coinbase-focused ETF. Some industry participants argue that the FSS's approach is overly cautious and lacks a clear legal foundation. However, the Financial Services Commission (FSC) will establish a Virtual Asset Committee to tackle the approval of spot crypto ETFs, which will oversee and guide the crypto industry in South Korea. The country has seen significant crypto transaction volume in recent years, driven by mistrust of traditional financial systems and efforts from large companies like Samsung in the crypto industry.



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