South Korea’s Crypto Push: Bitcoin ETFs Headed for Approval in 2025

Summary: South Korean financial regulators are preparing to approve spot Bitcoin and crypto-based ETFs by the second half of 2025, as part of a broader push to integrate digital assets into the mainstream financial system.

Background: Roadmap for Crypto ETF Introduction

The Financial Services Commission (FSC) has submitted a comprehensive roadmap to the Presidential Committee on State Affairs Planning, outlining regulatory infrastructure to support the issuance, trading, and valuation of spot crypto exchange-traded funds (ETFs). The move aligns with President Lee Jae‑myung’s goal of modernizing South Korea’s financial landscape by embracing blockchain technologies and digital assets.

The FSC’s plan includes detailed guidance on custody arrangements, trading platforms, and fund evaluation methods. Authorities aim to finalize the requirements in time for product launches in the latter half of 2025. Retail investors would have access to crypto ETFs through traditional brokerages, potentially reducing reliance on self-custody of digital assets.

Stablecoin Development: Won-Pegged Digital Currency by Late 2025

In tandem with its ETF initiative, the FSC plans to introduce a stablecoin pegged to the South Korean won by late 2025. The token is intended to serve as a domestic digital payment method and curb capital outflows.

The proposed framework will address issuance standards, reserve requirements, and operational audits to reinforce user trust and compliance. This would mark a significant step toward a regulated digital payments ecosystem in South Korea.

Investor Protection: Stricter Enforcement and Transparency

Investor safeguards are central to the proposed reforms. The government is considering a stringent “one-strike” policy for firms found guilty of market manipulation, mandating the return of illicit profits and allowing faster delisting of non-compliant public companies. Additional proposals include tougher penalties for unfair trading and enhanced disclosure requirements for crypto businesses.

Market Impact and Forward Outlook

South Korea remains one of the most active retail crypto markets globally, with investors holding an estimated $76 billion in digital assets as of late 2024. The planned ETFs could redirect part of this capital into regulated investment products, encouraging broader participation from risk-averse investors and reducing market volatility.

Additionally, the FSC is reviewing proposals to extend the Korea Exchange’s trading hours from 6.5 to 12 hours daily, a change that could enhance liquidity across asset classes, including cryptocurrencies.

While the roadmap is ambitious, experts emphasize the importance of careful implementation. Security protocols for custody, real-time pricing mechanisms, and rigorous audit standards will be critical to sustaining investor confidence and protecting underlying assets.

Should the initiatives proceed as expected, South Korea will join the United States, Canada, and certain European countries in legitimizing spot-based crypto ETFs—potentially setting a regional standard in Asia.

Featured image from Unsplash, chart from TradingView