South Korea Opens the Door to ETFs

South Korea is preparing for major changes in its approach to cryptocurrencies. As part of a broader economic growth strategy, the government announced that it intends to approve exchange-traded funds (ETFs) directly backed by Bitcoin by the end of 2026. The announcement was made on January 9 in an official policy plan released by the Ministry of Finance.

The new framework would allow investors to gain exposure to Bitcoin through traditional stock exchanges, without the need to use cryptocurrency trading platforms. Until now, such products have not been available in South Korea, as digital assets were not recognized as eligible underlying assets for ETFs. That is set to change.

The Financial Services Commission will oversee the implementation of Bitcoin ETFs, reviewing existing regulations and adapting them to accommodate these new financial instruments. The Korea Exchange has stated that its technical infrastructure is already capable of supporting such products. The government is also closely monitoring developments in the United States and Hong Kong, where similar ETFs are already being traded.

At the same time, new regulations for stablecoins are being prepared. Under the next phase of digital asset regulation, issuers of stablecoins will be required to obtain licenses and maintain full, 100 percent reserves. Users will gain a clear legal right to redeem stablecoins for traditional currency, and the rules will also cover cross-border transfers. The goal is to increase security and trust in these instruments.

The government is also pursuing ambitious plans to digitize public finances. By 2030, approximately 25 percent of state treasury funds are expected to be converted into so-called deposit tokens, which would be used for government payments and settlements. This will require amendments to several laws as well as the introduction of digital wallets for the public sector.

Legislative proposals are currently being drafted. If they are adopted, Bitcoin-based ETFs could enter the market before the end of this year, opening a new chapter for South Korean investors and the country’s financial market.