South Korea and the United States are set to engage in talks regarding the regulation of cryptocurrencies and digital assets. The head of South Korea’s financial watchdog, Governor Lee Bok-hyun, is scheduled to meet with US Securities and Exchange Commission chair Gary Gensler in May to discuss two key issues: classifying non-fungible tokens (NFTs) and approving spot Bitcoin exchange-traded funds (ETFs).
Currently, South Korea does not consider NFTs as “virtual assets,” a classification that brings them under the purview of financial regulators. This meeting aims to determine whether NFTs should be categorized similarly, potentially subjecting them to stricter regulations currently imposed on crypto service providers. The tightening of regulations in September 2021 led to the closure of over half of South Korea’s cryptocurrency exchanges due to their inability to comply.
The discussion will also address the controversial topic of spot Bitcoin ETFs. While such investment vehicles are prohibited in South Korea, both the ruling and opposition parties have expressed their intention to launch local spot Bitcoin ETFs in the lead-up to the upcoming general election in April. This move signifies the growing demand for these investment products among South Korean investors.
The upcoming dialogue represents an important step towards establishing a comprehensive regulatory framework for cryptocurrencies in South Korea. The country’s regulatory framework for protecting crypto investors is set to take effect in July this year.