South Korea’s KODA Reports 250% Surge in Crypto Holdings

1. KODA’s Surge: South Korea’s KODA witnesses a 250% increase in crypto assets.

2. SEC’s approval of spot Bitcoin ETFs in January, contributing to a broader uptick in the crypto market.

3. Caution is advised by the Financial Services Commission (FSC), urging compliance with existing guidelines and the Capital Markets Act.

Korea Digital Asset (KODA), South Korea’s primary institutional crypto custodian, has experienced a remarkable 250% surge in its crypto assets under custody during the latter half of 2023. This surge is intricately linked to the mounting anticipation surrounding the potential launch of local spot Bitcoin exchange-traded funds (ETFs).

The global crypto market has been, fueled by the US Securities and Exchange Commission’s (SEC) approval of spot Bitcoin ETFs in January. In fact, KODA’s crypto assets increased to approximately 8 trillion Korean won (~ $6 billion). Up from about 2.3 trillion Korean won (~ $1.7 billion) at the year’s midpoint. This surge aligns with a broader uptick in crypto market enthusiasm globally.

KODA’s Strong Market Presence and SEC Discussions

KODA has solidified its market presence by managing over 200 crypto wallets and serving around 50 institutional customers, claiming an 80% local market share by mid-2023. The Financial Supervisory Service (FSS) plans discussions between its governor, Lee Bok-hyun, and SEC chief Gary Gensler in Q2 2024. Therefore, the talks will center on virtual asset regulations and the potential for Bitcoin spot ETFs, showcasing a commitment to international cooperation.

While excitement grows, the Financial Services Commission (FSC) of South Korea urges local securities firms to tread cautiously. Engaging with overseas-listed spot Bitcoin ETFs could conflict with existing virtual asset guidelines and the Capital Markets Act.

“Domestic securities firms brokering overseas-listed Bitcoin spot ETFs may violate the existing government stance on virtual assets and the Capital Markets Act,” 

FSC said.

Although it emphasise the need for regulatory compliance. The ruling People Power Party is reportedly contemplating allowing investments in crypto products approved by developed countries, potentially impacting over 11 million crypto users.

Upcoming Strict Crypto Regulations in South Korea

However, as the country explores new possibilities, it is simultaneously gearing up to enforce strict crypto regulations. The forthcoming Virtual Asset User Protection Act, effective from July 2024, aims to clamp down on illicit crypto activities. It aims showcasing South Korea’s dedication to fostering a secure and orderly crypto market.