(Bloomberg) — South Korea sought to stifle a potential flood of hot money flowing into Bitcoin spot exchange-traded funds in the United States, stoking confusion and upending many stocks.
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The Financial Services Commission, the country’s securities regulator, said on Thursday that brokering such ETFs could violate the government’s current stance on virtual assets and its Capital Markets Act. Wizit Co. plunged as much as 13% and other crypto-related stocks fell in early Friday trading.
It’s one of the first cautious responses from a major regulator after the U.S. Securities and Exchange Commission gave the green light to a dozen ETFs to directly hold Bitcoin earlier this week. South Koreans are known for embracing crypto assets and a digital assets bill was approved last year to strengthen investor protections. Consumer protection has been in focus since the implosion of more than $40 billion in tokens created by Do Kwon.
Read: Korea’s Retail Army Goes All-In on US Leveraged ETFs
The FSC said it plans to further review digital asset rules as foreign regulations evolve.
The batch of U.S. spot Bitcoin ETFs — including offerings from investment firms BlackRock Inc. and Fidelity Investments — is off to a strong start, with some $4.6 billion worth of shares changing hands in from a frenetic start on Wall Street on Thursday. Industry advocates view ETFs as the ultimate stepping stone to broader adoption by ordinary investors and the catalyst for further gains.
–With the help of Youkyung Lee.
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