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(Bloomberg) — The campaign in South Korea’s parliamentary election has underlined the country’s status as one of the world’s largest crypto markets, with both major political parties promoting respective inducements to win votes.
President Yoon Suk Yeol’s People Power Party has vowed to delay the digital-asset tax, while the opposition Democratic Party has promised to lift restrictions on exchange-traded funds — including US bitcoin products — that directly hold the token.
“We are going to allow ETFs, whether domestic or foreign,” Hwanseok Choi, a Democratic Party policy expert, said in a statement citing his manifesto. Hwanseok, a member of the party’s think tank who participated in drafting the manifesto, said: .
Yoon is trying to wrest control of the legislature from the Democratic Party-led progressive camp in the April 10 election. Official figures show that more than 6 million South Koreans – more than 10% of the population – participated in the crypto market through registered exchanges in the first half of last year. It represents a large group of potential voters in a decisive election.
etf controversy
In January the US gave the green light to ETFs investing directly in Bitcoin, and the products have garnered total assets of about $57 billion so far. South Korea’s securities regulator immediately said that brokering products locally could be a violation of the law, effectively curbing the potential flow of speculative cash.
The move caused some confusion and sent many stocks into panic mode. The People Power Party’s manifesto does not focus on the controversy, but instead promises to delay planned taxes on crypto profits beyond the scheduled deadline of 2025.
The South Koreans have been active in the latest digital-asset bull market and are famous for their obsession with smaller cryptocurrencies, not just market-leader Bitcoin. Upbit, the largest domestic crypto exchange, regularly ranks among the top platforms globally for trading volume.
South Koreans invested more than $200 million in shares of US-listed bitcoin holder MicroStrategy Inc last month, Korea Securities Depository data shows. He also invested in US crypto-futures ETFs, which are permitted products.
Even election candidates have exposure: about 7% own crypto, according to a Yonhap report that analyzed asset disclosures.
crypto risk
The flip side of such speculative hostility is that crypto is a highly risky sector – the nation infamously spawned Du Quoin and his doomed LUNA and TerraUSD tokens, which could explode to more than $40 billion if they explode in 2022. Happened.
But memories of the wipeout, which affected hundreds of thousands of people, are being overshadowed by this year’s $900 billion boom in the crypto market. A dedicated investor-protection framework will come into effect in July, and both sides have indicated they will also pursue broader regulation for the industry.
Coupled with continued concessions from politicians, this points to the possibility of greater acceptance of digital assets in South Korea, echoing a broader Asian trend. In contrast, many US officials are hostile towards crypto.
Expectations are rising that spot-crypto ETFs will eventually be allowed, increasing the chances of the crypto market becoming “widely established as an investment asset” in South Korea, said Yumin, alternative asset analyst at Hanwha Investment & Securities Co. Kim has written in a recent note.
More stories like this are available on Bloomberg.com
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Published: 06 April 2024, 05:31 am IST
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