South Korea To Approve Spot Bitcoin ETFs In Policy Shift

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South Korea is reportedly gearing up to open its financial markets to spot bitcoin exchange-traded funds (ETFs) this year, in a significant shift in the country’s approach to digital assets. This move comes as regulators work on a comprehensive new crypto law to regulate the growing cryptocurrency market.

The government’s newly released 2026 Economic Growth Strategy outlines the plan, with the Financial Services Commission (FSC) leading the implementation efforts. If approved, spot bitcoin ETFs would be made available to domestic investors for the first time, aligning South Korea with markets like the United States and Hong Kong where similar products have gained significant traction.

Previously, Korea’s capital markets rules did not recognize cryptocurrencies like bitcoin or bitcoin ETFs as eligible underlying assets for ETFs, preventing their launch. However, policymakers are now looking to bring more crypto activity into regulated channels and reduce capital outflows to offshore platforms.

The push for bitcoin ETFs is accompanied by a broader overhaul of digital asset regulation, with the FSC fast-tracking “Phase Two” digital asset legislation focusing on stablecoins. The proposed law will introduce a licensing system for stablecoin issuers, minimum capital requirements, and strict reserve rules mandating at least 100% backing of issued tokens, as well as guaranteeing user redemption rights.

To prevent incidents like the 2022 Terra-Luna collapse, regulators are implementing measures to ensure the stability and security of digital assets in the country. This includes drafting standards for cross-border stablecoin transfers and transactions in coordination between the FSC and the Ministry of Economy and Finance.

Globally, the success of spot bitcoin ETFs in the US and Hong Kong has influenced South Korea’s decision to open its financial markets to these products. The Korean Financial Intelligence Unit estimates that over 10 million people in the country are eligible to trade digital assets, highlighting the potential demand for such products.

In addition to private markets, blockchain technology is making its way into public finance in South Korea. The government plans to digitize parts of the national treasury using “deposit tokens,” a form of government-linked digital currency separate from stablecoins. By 2030, up to 25% of treasury operations could be conducted through blockchain-based payments, leading to faster settlement, lower administrative costs, and improved transparency.

Pilot programs are already underway, with lawmakers reviewing amendments to establish a legal foundation for these systems in the Bank of Korea Act and the National Treasury Act. This move signals South Korea’s commitment to embracing digital innovation in its financial sector for a more efficient and transparent financial ecosystem.