South Korea Moves to Approve Spot Bitcoin ETFs

South Korea is reportedly preparing to open its financial markets to spot bitcoin exchange-traded funds (ETFs) this year. This move represents a departure from the country's long-standing approach to digital assets, as regulators accelerate work on a comprehensive new crypto law.

The plan was outlined in the government's newly released 2026 Economic Growth Strategy. The Financial Services Commission (FSC) is taking the lead on implementation. If approved, spot bitcoin ETFs would become available to domestic investors for the first time.

Previously, Korea's capital markets rules did not recognize cryptocurrencies or bitcoin ETFs as eligible underlying assets, effectively blocking their launch. That stance is now changing as policymakers look to bring more crypto activity into regulated channels and reduce the flow of capital to offshore platforms.

By approving these products, South Korea would join markets such as the United States and Hong Kong, where similar products have already attracted billions of dollars in inflows. The Korea’s Financial Intelligence Unit estimates that more than 10 million people are eligible to trade digital assets domestically, underscoring the scale of potential demand.

The bitcoin ETF push is moving in parallel with a broader overhaul of digital asset regulation. The FSC is fast-tracking what it calls “Phase Two” digital asset legislation, a bill expected to focus heavily on stablecoins.

According to government plans, the law will introduce a licensing system for stablecoin issuers, minimum capital requirements, and strict reserve rules. These rules will require at least 100% backing of issued tokens. Issuers would also be required to guarantee user redemption rights.

Regulators say the framework is designed to prevent failures like the 2022 Terra-Luna collapse, which wiped out roughly $40 billion and had deep ties to South Korea. Alongside domestic rules, authorities are drafting standards for cross-border stablecoin transfers and transactions, reflecting growing use of digital tokens in trade and remittances. The effort is being coordinated between the FSC and the Ministry of Economy and Finance.

Officials point to global precedents as a key influence for the new regulations. Spot bitcoin ETFs in the U.S. and Hong Kong have seen strong demand, with major asset managers now treating the products as mainstream investment tools.

The shift in South Korea reflects a growing recognition of the need to compete in the global digital asset market. By providing a regulated avenue for investment, the government hopes to retain capital within the domestic financial system.

The potential demand is significant. The Korea’s Financial Intelligence Unit estimates that over 10 million individuals are currently eligible to trade digital assets domestically. This large pool of potential investors suggests that the introduction of spot bitcoin ETFs could result in substantial capital inflows into the regulated market.

Beyond private markets, blockchain technology is also moving into public finance. The government plans to digitize parts of the national treasury using so-called “deposit tokens”, a form of government-linked digital currency distinct from stablecoins.

By 2030, up to 25% of treasury operations could be conducted via blockchain-based payments. Pilot programs are already underway, and lawmakers are reviewing amendments to the Bank of Korea Act and the National Treasury Act to establish a legal foundation for these systems.

Officials state that the goal is faster settlement, lower administrative costs, and improved transparency. This initiative highlights the government's intent to leverage blockchain technology for efficiency in public administration, separate from the speculative aspects of cryptocurrency trading.