The recent approval of spot Ethereum exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC) has put pressure on Korean regulators to reconsider their stance on digital assets. The SEC's decision to greenlight ETFs for Ethereum, the world's second-largest cryptocurrency, has sparked hopes that Seoul's financial regulators will follow suit and approve cryptocurrency ETFs.

In contrast to their US counterparts, the Korean Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have been cautious about introducing crypto asset trading on traditional securities markets. According to the FSC, ETFs must strictly adhere to the Capital Markets Act, which stipulates that they must only be linked to traditional underlying assets such as established financial instruments, securities, international currencies, and commodities.

However, industry experts argue that this stance is outdated and needs revision to accommodate the growing significance of digital assets in modern finance. Xangle, a leading digital currency data provider based in Seoul, has spoken out against the ban on digital assets in the traditional securities market, describing it as 'outdated' and needing revision.

The head of the Korean Stockholders' Alliance, Jung Eui-jung, also stressed the importance of Seoul following the US's example and approving Bitcoin and Ethereum ETFs. Jung warned that if Seoul regulators continue to make little progress while the US advances, investors might shift their funds to US markets, saying it will be a "matter of time for the US to fully open the door for other less-traded cryptocurrencies."

The approval of cryptocurrency ETFs marks a significant step in bridging the gap between traditional finance and the digital asset industry. ETFs are financial instruments that allow investors to gain exposure to a basket of securities, and approving crypto ETFs would provide investors with a new way to gain exposure to digital assets.

The South Korean government has issued a new update to the Virtual Asset Users Protection Act in early February, but industry experts argue that more needs to be done to accommodate the growing significance of digital assets in modern finance. The pressure is now on Korean regulators to reconsider their stance on digital assets and approve cryptocurrency ETFs, or risk falling behind their US counterparts.