South Korea’s top exchange is considering adding digital asset spot-traded exchange-traded funds (ETFs) to its product suite to revive investor interest after a year of political instability.
Elsewhere, one of America’s largest asset managers, Morgan Stanley (NASDAQ: MS), is considering adding digital assets to its online brokerage to take advantage of Donald Trump’s rise to power and the expected “crypto” investment rush.
South Korea heats up to STOs, spot ETFs
In January of this year, the US Securities and Exchange Commission (SEC) approved the first round of BTC spot ETFs, and since then other nations have explored similar products. Some, like Thailand and Hong Kongfollowed suit and launched their own ETFs.
South Korea could be the next to join its Asian peers. Jeong Eun-bo, chairman of the Korea Exchange (KRX), recently revealed that the stock exchange is exploring new business avenues, such as ETFs, to revive the sector.
South Korea went through one rocky political year year 2024. President Yoon Suk Yeol imposed martial law in early December, leading to his (and his successor’s) impeachment by parliament within days. The country is now led by Finance Minister Choi Sang-mok as Acting President and Acting Prime Minister.
These scandals, along with global political and economic upheavals, have led to a steep decline in trading activity on the KRX. Eun-bo believes that exchange must reinvent itself to bring investors back to Asia’s sixth-largest stock exchange.
“We will compare foreign cases for new companies such as virtual currency ETFs and explore new areas of the capital market,” he said.
The move would be a departure from the country’s conservative stance. Despite the rise of digital asset ETFs in the Asian and North American markets, Korea, Japaneseand some other major economies have steered clear. Last year, experts at the Korea Institute of Finance warned against the ETFs, which they argued posed a significant risk to investors and could undermine financial stability.
However, ETF approval would comply with campaign promises made by the opposition Democratic Party ahead of this year’s election, where it won by a landslide. Lawmakers from the party said they would ask financial regulators to review ETFs, unless they changed existing capital markets laws.
South Korea’s digital asset journey may go beyond ETFs. Speaking at the same event, Financial Services Commission (FSC) Chairman Kim Byung-hwan revealed that the authority is considering approving security token offerings (STOs).
“We will institutionalize STO (tokenized securities) (…) to diversify the securities issuance and distribution system … we will reorganize the entire system so that comprehensive financial investment companies can be faithful to their original role of providing corporate financing and venture capital,” Kim Kim told stakeholders.
Kim further appealed to the government, parliament and corporate investors to work together to revive the market.
South Korea still struggles with taxation of digital assets. A new law imposing a 20% tax on profits from digital assets was supposed to take effect in 2020, but a series of politically motivated delays have moved it to 2027.
Despite the challenges, South Korea remains one of the world’s largest markets for digital assets. Studies have shown that over six million South Koreans trade in digital assets, representing over 12% of the population.
Morgan Stanley explores ‘crypto’ on E*TRADE
In the US, Morgan Stanley, one of the country’s largest asset managers, is considering adding digital assets to its online brokerage platform, E*TRADE.
Morgan Stanley believes that when Donald Trump takes over as the new president of the United States later this month, investments in digital assets will increase, reports The information that first broke the story. The Republican president-elect has promised it implement a friendly framework it makes the US the global “crypto capital”.
E*TRADE is one of the leaders in online brokerage in the US, offering stocks, bonds, mutual funds, retirement accounts and more. Morgan Stanley acquired the platform in 2020 for $13 billion. At that time, E*TRADE boasted over five million accounts and over $360 billion in assets.
It is not the first time E*TRADE has explored digital assets. In 2018, the platform weighed digital currency products, but the rules were more restrictive. Discussions about Morgan Stanley’s acquisition also got in the way. In practice, a huge opportunity was missed like others, like Robinhood (NASDAQ: HOOD), came in to offer digital currency services mixed with stock and bond trading.
E*TRADE currently offers some digital asset-related services, such as ETFs, futures and stocks related to “crypto” companies. However, this would be the first time it allows its customers to directly buy, sell and store digital assets, competing with established players such as Robinhood and Coinbase (NASDAQ: COIN).
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