South Korea Plans Spot Crypto ETFs by 2025 to Boost Market

South Korea's Financial Services Commission (FSC) has submitted plans to introduce spot crypto ETFs by the second half of 2025, marking a significant shift in the country's regulatory stance towards cryptocurrencies. This move aligns with President Lee Jae Myung’s election promise to lift the domestic ban on crypto ETFs, signaling a strategic pivot to integrate the country’s substantial crypto holdings into its financial ecosystem.

The roadmap, submitted to the Presidential Committee on Policy Planning, outlines plans to establish robust regulatory frameworks. These include enhanced anti-money laundering (AML) and custody standards to mitigate systemic risks. This initiative comes as the country addresses gaps in its financial ecosystem while aiming to position itself as a regulated crypto hub ahead of competitors.

South Korea is home to one of the world’s largest retail cryptocurrency markets. If successfully launched, spot Bitcoin ETFs could notably upscale these numbers and put the country among leading regions in cryptocurrency adoption. The initiative also includes a parallel plan to introduce won-based stablecoins by late 2025. This move addresses concerns over capital outflows and aims to bolster financial sovereignty and empower the youth economically, a cornerstone of the administration’s agenda.

The FSC's plans to legalize spot crypto ETFs by late 2025 are part of a broader roadmap that includes regulatory approval for KRW-backed stablecoins. This dual approach is designed to curb capital outflow and enhance the country's financial stability. The FSC's roadmap also involves a review of crypto exchange fees, signaling increasing regulatory scrutiny for digital asset exchanges operating in the region.

The introduction of spot crypto ETFs in South Korea is expected to have a profound impact on the local cryptocurrency market. By providing a regulated investment vehicle for retail investors, the ETFs could attract more capital into the crypto space, further solidifying South Korea's position as a leading player in the global cryptocurrency landscape. The regulatory framework for stablecoins is also being prepared, which will further enhance the stability and security of the crypto market in the region.