The recent approval of spot Ethereum ETFs by the US Securities and Exchange Commission has increased pressure on South Korea's financial regulators to approve similar crypto exchange-traded funds.

The approval of Ethereum ETFs last week was a significant shift in the US market, where expectations were leaning towards a rejection, at least until May. According to The Korea Times, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) in South Korea are hesitant about permitting crypto assets on the traditional securities market.

The FSC referenced the Capital Markets Act as the basis for its cautious stance on crypto ETFs. This Act limits ETFs to underlying assets that are typically real financial assets or securities such as international currencies or commodities.

Jung Eui-jung, head of the Korean Stockholders’ Alliance, urged the authorities to follow the US example and approve ETFs for Bitcoin and Ethereum. He believes this move is crucial to prevent investors, both in traditional finance and digital assets, from leaving Korea.

The current scenario in South Korea doesn’t offer spot Bitcoin and Ethereum ETFs for crypto investors. Additionally, financial authorities shut down any hopes for regulations allowing the sale of Bitcoin futures ETFs earlier in January.

In March, Lee Bok-hyun, governor of the Financial Supervisory Service, acknowledged internal debates regarding virtual assets. While he holds a positive view personally, there are others within the agency who express more caution, he mentioned. Lee emphasized the need to consider all perspectives and have open discussions before making any decisions.

South Korea's cryptocurrency market gained significant attention during the country's parliamentary elections in April. Both major political parties seized the opportunity to attract voters by making crypto-related promises.

The People Power Party, led by President Yoon Suk Yeol, recognized the crypto industry's growing influence and pledged to postpone the implementation of a digital asset tax, a move likely to appeal to crypto investors.

On the other hand, the opposition Democratic Party focused on easing restrictions on ETFs, including those enabling investment in US Bitcoin products. This strategy aimed to attract voters seeking easier access to cryptocurrency investments.