South Korean Financial Research Institute warns against spot crypto ETFs

The South Korean Financial Research Institute revealed the effects of spot crypto exchange-traded funds (ETFs) in its latest report, stating that the country may experience more irregularities due to these works.

The Korean Finance Institute, in its report published on Sunday, said: “Allowing such works could lead to side effects such as increased inefficiency in resource allocation, increased exposure to crypto-related risks in the financial market, and weakening of financial stability.”said.

The local intent agency noted that in the context of the crypto market, negative externalities could hinder large cash flows in the local financial market, meaning relatively less funding for local industries. KIF also stated that contractions in the crypto market could simply affect the local financial market, and this could shake the confidence of investors and regulators in the market.

The authors of the document stated that even for the current stage of development, such an attempt would only be harmful. But the firm realized that crypto ETFs could become a viable store of value if underlying cryptocurrencies evolve into more recognized and differentiated safe asset classes.

Currently, South Korean regulators are BitcoinIt does not allow the launch or trading of spot crypto ETFs on the grounds that cryptocurrencies and other cryptocurrencies could be used as underlying assets of the ETFs.

However, South Korea’s ruling left-wing Democratic Party has introduced a plan to allow spot crypto ETFs to be sold in the country, as one of its promises in the last general election.

Locally, the US launched its first spot crypto ETFs in January. The 11 spot Bitcoin funds launched in the US reached a combined net size of $55.55 billion, exceeding pre-launch expectations. Hong Kong launches Bitcoin and etherlaunched spot ETFs for and Australia’s largest stock exchange ASXIt listed its first spot Bitcoin ETF this week.

This news was first published on the Coin Engineer website.