South Korean SEC Forms Committee to Explore Bitcoin ETFs and Corporate Accounts

• The South Korean SEC’s new virtual asset committee will evaluate Bitcoin spot ETF approvals.
• Establishing corporate accounts for crypto exchanges could lead to greater market participation within South Korea’s crypto ecosystem.
• The potential regulatory changes aim to mitigate the Kimchi premium, stabilizing cryptocurrency pricing by attracting arbitrage funds and market makers.

The South Korean Securities and Exchange Commission (SEC) has taken a step by forming a virtual asset committee. This newly established body will focus on critical discussions surrounding the approval of Bitcoin spot exchange-traded funds (ETFs) and the allowance of corporate accounts for cryptocurrency exchanges. 

In a charted posted by Ki Young Ju via the X Space with Bitcoin Korea Premium Index compared to Bitcoin’s USD price from September 2020 to September 2024. The Bitcoin price shows volatility, reaching a peak near $70K in late 2021, followed by notable declines and fluctuations. 

The Korea Premium Index (green and red), which measures the price difference between Korean and global markets, also experiences sharp spikes and drops. It reached extreme highs in early 2021 before stabilizing at lower levels.

The index fluctuates between positive and negative territory, indicating periods of premium and discount in the Korean market compared to the global price.The committee’s primary objective is to evaluate the potential approval of Bitcoin spot ETFs. These funds would allow investors to directly invest in Bitcoin, potentially increasing institutional interest. 

Such approval would mark a pivotal moment in South Korea’s financial landscape, bringing the country in line with other regions that have embraced Bitcoin ETFs. Analysts believe that this could lead to enhanced market liquidity and investment opportunities within the cryptocurrency sector.

In addition to the ETF discussions, the virtual asset committee will also explore the implications of permitting corporate accounts for crypto exchanges. Enabling corporate accounts could facilitate increased participation from institutional investors, enhancing the overall market depth. 

The establishment of this committee and the potential changes in regulations may help mitigate the so-called “Kimchi premium,” which refers to the price difference for cryptocurrencies traded in South Korea compared to international markets. 

As arb funds (arbitrage funds) and market makers (MMs) enter the Korean market, this premium could decrease, leading to more stable pricing for cryptocurrencies. The anticipated increase in market participants could enhance the overall efficiency and competitiveness of South Korea’s crypto exchanges.