FameEX Hot Topics | South Korean Think Tank Warns Against Crypto ETFs

A South Korean finance and economics think tank has advised against the approval of spot crypto exchange-traded funds (ETFs) in the country. Researcher Bo-mi Lee highlighted the volatility and risks associated with cryptocurrencies, calling for more research and regulatory measures before introducing such products. Lee argued that approving spot crypto ETFs could negatively impact the nation's financial stability, suggesting that a rise in digital asset prices following the approval of these ETFs would lead to significant capital inflows into the crypto market.

Lee emphasized that this influx of capital could result in inefficiencies in resource allocation. Additionally, the researcher noted that financial market liquidity and the health of financial companies would deteriorate if crypto prices were to fall. Due to these concerns, Lee recommended further research into the potential losses and benefits of introducing spot crypto ETFs. Currently, the researcher believes that the potential losses outweigh the benefits.

Furthermore, Lee pointed out the lack of understanding of digital asset value and their high volatility. The introduction of such products might lead market participants to mistakenly perceive them as "proven assets," increasing risks. Therefore, Lee stressed the importance of preparing robust regulatory measures to mitigate these risks. The impact of digital assets on investors and the financial market remains uncertain, necessitating sufficient regulatory measures before launching spot crypto ETFs.

In response to growing concerns about crypto assets, South Korea's financial regulator is tightening its rules to protect users. Starting July 19, registered crypto exchanges in the country will be legally required to evaluate the tokens listed on their platforms. These exchanges must assess whether to continue supporting or delist the tokens. The new law mandates a review of more than 600 crypto assets listed on registered exchanges. Those failing to comply with these regulations will face severe penalties, including fines and jail sentences.

In summary, South Korean researcher Bo-mi Lee warns that approving spot crypto ETFs could destabilize the financial system and advocates for thorough research and regulatory measures to manage associated risks. Meanwhile, the country's financial regulator is implementing stricter rules to safeguard crypto users.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.