Representative Min Byung-deok of the Democratic Party proposed a partial amendment to the 'Capital Market and Financial Investment Business Act' on the 27th, which includes provisions to institutionalize exchange-traded funds (ETFs) based on digital assets such as Bitcoin.
The key point of this amendment is to expand the scope of underlying assets and trust assets of financial investment products to digital assets. This will allow digital assets to be used as underlying assets for financial products like ETFs and establish a legal basis for trustees to custody and manage digital assets.
Notably, the amendment strengthens investor protection by clearly defining the requirements and procedures for trustees to entrust the custody and management of virtual assets to virtual asset businesses. Additionally, it has broadened the scope of financial product development by establishing a legal basis for over-the-counter trading of virtual asset derivatives.
This amendment, along with allowing the issuance of won-based stablecoins, is one of President Lee Jae-myung's key campaign promises. In the United States, the Securities and Exchange Commission (SEC) fully approved Bitcoin spot ETFs in 2024, and many investors are already actively trading these ETFs. However, in Korea, digital assets have not been recognized as underlying assets under the Capital Market Act, preventing the launch of related ETFs. This amendment aims to improve such unreasonable situations.
The financial investment industry generally views this amendment positively. However, some argue that allowing over-the-counter derivative intermediaries to trade derivatives through competitive bidding could be risky. They suggest that given the high-risk nature of derivative trading, only qualified businesses with risk management capabilities should be permitted.
Representative Min Byung-deok emphasized, "This amendment to the Capital Market Act will be a crucial turning point for the Korean financial market, achieving innovation in the domestic capital market and investor protection simultaneously. By incorporating digital assets into institutional financial products, we will enhance the global competitiveness of the domestic financial industry and provide investors with a safer and more transparent investment environment."
