South Korea Restricts Firms From Including Coinbase, Strategy in ETF Portfolios

The Financial Supervisory Service (FSS), South Korea’s integrated financial regulator, has recommended asset management firms “not to excessively include” crypto stocks like Coinbase and Strategy in their ETFs portfolios.

The regulator has issued verbal guidance to domestic firms, restricting the proportion of crypto companies in ETFs, Herald reported.

The directive indicates that the 2017 administrative guidance related to virtual currencies is still valid and must be followed.

Additionally, the FSS administrative guidance comprises provisions restricting financial institutions from “holding, purchasing, acquiring collateral, and investing in virtual assets.”

“Recently, there has been a trend of deregulation related to virtual assets in the U.S. and Korea, but there have been no specific laws or guidelines established yet,” an FSS official noted. “This means that existing guidelines should be followed until the new system is complete.”

South Korea’s Existing Digital Asset Guidelines

Since 2017, Korean regulators have prohibited corporate transactions in virtual assets. The government’s decision at that time was driven by concerns over money laundering, given that corporate trading was seen as posing higher risks compared to individual trading.