South Korea’s Financial Supervisory Service (FSS) has warned asset managers to reduce their exposure to US-listed crypto companies in their ETF (exchange-traded fund) portfolios, according to local media.
South Korean Regulator Wants to Reduce Exposure to Crypto: Local Media
23 July 2025 - 16:14 CEST
The move, which would impact investments in shares of Coinbase and Strategy, signals a potential setback for crypto enthusiasts in the country, who had hoped for an environment more favourable to digital assets under the newly elected president.
Aspirations for financial reform
Lee Jae-Myung campaigned on economic stability and reform, digital innovation, and strong support for cryptocurrency adoption. He was also expected to catalyse the creation of a Won-backed stablecoin. However, the government finds itself navigating some speedbumps in the course of financial reform.
The FSS has emphasized a requirement from 2017 to comply with emergency measures related to virtual currencies. Notably, it has pointed out, spot crypto ETFs remain banned under South Korean financial regulations.
For the FSS, the “trend of deregulation related to virtual assets” and lack of explicit laws or guidelines is concerning, the Korean Herald reported.
Hopeful for the future
However, the financial regulatory body did indicate that there are still reforms coming.
An unnamed FSS official is quoted in the report as stating: “‘until the new system is completed, the existing guidelines should be followed.”
Another unnamed official is quoted, adding that: “this is a reminder to be careful about the overall ETF product design until the system is overhauled.”
While needing to abide by outdated regulations can be difficult, the signs are still trending positively for the South Korean market – it just may take more time than originally planned.
