Top South Korean presidential hopefuls support legalizing Bitcoin ETFs

South Korea’s potential legalization of spot Bitcoin exchange-traded funds (ETFs) is generating significant interest. All three major presidential candidates—Lee Jae-myung (Democratic Party), Kim Moon-soo (People Power Party), and Lee Jun-seok (New Reform Party)—have publicly supported Bitcoin ETFs and institutional crypto investment. This stance is a notable shift, as currently, Bitcoin ETFs and institutional crypto investment are banned in South Korea, resulting in retail investors driving 100% of trading volume.

The Democratic Party, under Lee Jae-myung’s leadership, has pledged to legalize spot crypto ETFs, reduce transaction fees, and create a safer investment environment for young people. These promises echo their 2024 election campaign platform, although progress has been slow.

While the candidates’ pro-crypto stance suggests a positive outlook for digital asset legislation, regulatory experts remain cautious. Anndy Lian, an author and intergovernmental blockchain advisor, notes that while the pledges signal potential change, past failures temper optimism. The People Power Party, elected in 2022, also promised to lift the ETF ban and revise the one-exchange-one-bank rule but failed to deliver before the President’s impeachment.

Lian draws a parallel with Hong Kong, which recently launched Bitcoin and Ether ETFs. However, their trading volume has been underwhelming compared to US counterparts. A pro-crypto president could accelerate reform, potentially aligning South Korea with global trends, particularly the US, where Bitcoin ETFs have seen substantial net inflows. The Financial Services Commission’s recent tone also hints at a more open approach to cryptocurrencies.

The situation highlights a complex interplay between political promises and regulatory realities. While the pro-crypto sentiment among leading candidates is encouraging, past experiences and the relatively muted success of Hong Kong’s ETFs suggest that the path to legalization in South Korea may be longer and more challenging than initially anticipated. The ultimate impact will depend on various factors beyond the candidates’ platforms, including the Financial Services Commission’s actions and the overall market conditions.