Discussions on the launch of spot bitcoin exchange-traded funds (ETFs) are poised to take center stage, propelled by the resounding victory of the main opposition Democratic Party of Korea (DPK) in the April 10 general elections.
The main opposition ran on a platform that the issuance, listing and trading of spot bitcoin ETFs would be allowed.
Further underpinning the optimism is the Hong Kong Securities and Futures Commission’s approved launch of spot bitcoin and ether, April 15 (local time).
The Hong Kong development followed Jan. 10 (local time) approval of spot bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC).
Many Korean investors are waiting for Korea’s Financial Services Commission (FSC) to join the global craze to the tune of hundreds of billions of dollars this year.
However, the FSC has yet to take steps to revise the Capital Markets Act whereby digital coins do not fall within the definition of “underlying assets,” and therefore are not recognized as valid asset classes.
The DPK maintains the major financial issue of the party platform will sail to victory, powered by the opposition-majority National Assembly.
The National Policy Committee — the standing committee governing the country’s financial regulations — can in theory bypass the law revision, pending changes in the FSC interpretation of underlying assets.
According to the National Election Commission (NEC), the DPK won 175 seats out of the total 300. The ruling People Power Party’s seat total came to 108.
Rep. Kim Han-kyu of the DPK, a vocal supporter of legalizing virtual assets sitting on the National Policy Committee, secured a second term.
The main opposition is planning to ask the FSC to approve the spot bitcoin ETFs upon the formation of the 22nd National Assembly's standing committees.
In case the financial regulator does not budge, the main opposition party will then shift its efforts to revising the Capital Markets Act.
Months of deliberation will follow, since specifics are finalized including the makeup of standing committee, proposals for amendments and subcommittee discussions before plenary session voting.
Chances of the FSC opposing the move remain slim, as has been tamped down by the DPK landslide victory.
Also factored in is concerns of financial isolationism whereby Korea — a financial laggard — falls further behind its advanced peers including the U.S., Hong Kong and Australia, which have all approved spot bitcoin ETFs.
The financial authorities are more likely than not to cave to the will of the public, as illustrated clearly by the election results, according to industry insiders.
“Political pressure will close in, and the authorities will not be able to remain dismissive of the calls for revision for long,” an industry insider said.
Crypto investment is also common among lawmakers. A total of 24 lawmakers held a combined 335.7 million won in digital coins, according to the NEC. Seven of them had holdings of over 10 million won in virtual assets.
They held the assets under the names of their own, their spouses or children. Of the total, 11 were DPK lawmakers and PPP seven.
Hong Kong approval
China AMC, a Chinese asset manager, said April 15 that it had received regulatory approval for the provision of “virtual asset management services."
It reportedly was actively deploying resources in the development of a spot bitcoin and ether ETF, according to local new media outlets.
Harvest Global and Bosera International each released statements, saying they also were cleared for the country’s regulatory approval for bitcoin and ether ETFs.
China spearheaded a massive crackdown on crypto trading in 2021, and trading of the virtual asset remains effectively banned since.
However, the development in Hong Kong signals the country’s shift in stance to becoming a crypto hub to compete with Dubai or Singapore.
The January U.S. SEC approval entailed a New York Stock Exchange-listed trading of 11 spot bitcoin ETFs managed by BlackRock, Grayscale and global top asset managers.
Whether Hong Kong, among the global financial leader economies alongside the U.S., would follow suit in the second quarter remains to be seen.
The price of digital coins hovers around $63,000, April 17, despite the Hong Kong development.
Also at play were concerns of a wider war in the Middle East and dashed hopes of an earlier-than-expected rate cut in the U.S.
Meanwhile, market watchers are bracing for the bitcoin halving, a historically decisive event for the price of the digital coins. The event, occuring every four years, was expected to take place around April 20.
In the past, bitcoin prices jumped sharply in the months following a halving. However, this time it may not undergo a similar phase of increasing value, since other macroeconomic or speculative forces could come into play.
Analysts at Bernstein, a global brokerage, have raised their price target for bitcoin to $90,000, up from $80,000.
They said the halving impact on bitcoin miners seems “relatively mild,” a concern offset by bull market conditions with strong ETF inflows and robust trading fees.