A top South Korean economic think tank has poured cold water on the idea of Seoul approving a Bitcoin (BTC) or Ethereum (ETH) spot exchange-traded fund (ETF).
The comments came in a paper by the Korea Institute of Finance researcher Lee Bo-mi, News1 reported.
Lee claimed that “introducing cryptoasset-linked products” could undermine South Korea’s “financial stability.”
Lee claimed that approving crypto-linked financial products would likely spike crypto prices.
And this would lead to “a significant amount of capital to move to the virtual asset market,” Lee said.
This, the researcher explained, would likely “increase inefficiency” in the “resource allocation” space.
Conversely, when crypto prices fall, Lee warned, the “liquidity of the financial markets and the soundness of financial companies” could “suffer.”
Lee opined that more research was needed on the “benefits and drawbacks” of green-lighting cryptoasset-linked products.
Politicians have promised to tackle the issue. But regulators appear to be favoring a more cautious stance.
Regardless, financial and crypto advocates have urged Seoul to follow Washington and Hong Kong’s lead in approving crypto spot ETFs.
Cryptocurrency exchanges to evaluate listed coinshttps://t.co/JmGdoGgNyv pic.twitter.com/tNYnFm6T3l
— The Korea Times (@koreatimescokr) June 16, 2024
Lee argued that the drawbacks of crypto spot ETF approval would outweigh the benefits, explaining:
“There is a general lack of understanding about the value of cryptoassets. Tokens are highly volatile. Incorporating products that use these as underlying assets into the [South Korean] institutional system creates the perception among market participants that virtual assets have a proven [track record].”
The researcher said
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