South Korea set to reverse its position on bitcoin ETFs amid wider cryptocurrency initiatives

South Korea to Introduce Spot Bitcoin ETFs as Part of Digital Asset Expansion

This year, South Korea is preparing to allow spot bitcoin (BTC) exchange-traded funds (ETFs) to be traded in its markets. This initiative is a key component of the Financial Services Commission’s (FSC) broader digital asset agenda, which aligns with the nation’s 2026 economic growth blueprint.

Previously, cryptocurrencies such as bitcoin were not officially recognized as legitimate assets for ETFs in South Korea, which prevented the launch of these investment products domestically.

The FSC is taking cues from global markets like the United States and Hong Kong, where spot bitcoin ETFs have gained considerable traction. Notably, a BlackRock (BLK) executive has stated that these funds have become the primary revenue driver for the world’s largest asset management firm.

Growing Crypto Market Participation

According to findings from the Korea Financial Intelligence Unit (KoFIU), during the first half of last year, there were 10.7 million eligible crypto traders in South Korea, with an average daily trading volume reaching 6.4 trillion Korean won (approximately $4.39 billion).

New Digital Asset Legislation on the Horizon

The government is also in the process of formulating a comprehensive Digital Asset Act, which will focus on the regulation of stablecoins, as reported by local media. The proposed law is set to establish a licensing system for stablecoin issuers, mandate full reserve backing, and ensure that users retain the right to redeem their holdings.

Additionally, the legislation will clarify the rules for cross-border trading and transfers of stablecoins.

Digitizing Public Funds with Blockchain

In a separate move, South Korea aims to modernize public fund management by introducing deposit tokens—government-backed digital tokens that differ from stablecoins. The objective is to shift a quarter of treasury transactions to blockchain-based payment systems by 2030.

Pilot projects are already in progress, and updates to the legal framework governing the central bank and treasury operations are anticipated within the year.