South Korea Could Soon Follow Hong Kong in Approving Spot Bitcoin ETFs

South Korea could soon follow Hong Kong in legalizing spot Bitcoin exchange-traded funds (ETFs), as the country's top presidential candidates have expressed pro-crypto positions.

South Korea could soon follow Hong Kong in launching Bitcoin exchange-traded funds (ETFs), as the country’s top presidential candidates have expressed pro-crypto positions.

Still, some industry observers are cautious about the likelihood of near-term regulatory change.

“All three major South Korean presidential candidates support #Bitcoin ETFs and institutional investment,” Ki Young Ju, the founder and CEO of onchain data platform CryptoQuant, said on May 14.

Currently, Bitcoin ETFs and institutional crypto investments are banned in South Korea, which means that “100% [of the] volume comes from retail,” Ju added.

Related: Bitcoin more of a ‘diversifier’ than safe-haven asset: Report

On May 6, South Korea’s Democratic Party leader Lee Jae-myung promised to legalize spot crypto ETFs, lower transaction fees and “create a safe investment environment so that young people can [build] assets and plan for the future, according to a report by The Korean Economic Daily (KED).

The Democratic Party made similar promises in its 2024 election campaign, including the legalization of spot crypto ETFs, but progress has been delayed, KED reported.

Related: SEC delays Solana ETF as decisions for Polkadot, XRP loom

Candidates back ETFs, but history casts doubt

While the crypto-friendly stances of the leading candidates suggest a promising future for digital asset legislation in South Korea, regulation experts are skeptical.

“The candidates’ pro-crypto pledges to push to legalise spot Bitcoin ETFs and reduce fees signal a potential shift. But history tempers optimism,” Anndy Lian, author and intergovernmental blockchain adviser, told Cointelegraph.

“A pro-crypto president could drive reform, aligning South Korea with global trends like the US, where Bitcoin ETFs have attracted over $17 billion in net inflows since 2021,” Lian said, adding that the Financial Services Commission’s tone also suggested “regulatory openness” for cryptocurrencies.

However, the People Power Party, elected in 2022, also promised to lift the crypto ETF ban and revise the controversial one-exchange-one-bank rule, “but failed to act before President Yoon’s impeachment,” Lian added.

In Hong Kong, the first batch of Bitcoin and Ether (ETH) ETFs launched on April 30, but they have seen disappointing trading activity so far.