News
South Korean Think Tank Warns Against Cryptocurrency ETFs — TradingView News
A South Korean finance and economics-focused think tank has objected to the East Asian country’s approval of cryptocurrency exchange-traded funds (ETFs).
Bo-mi Lee, a researcher at the Korea Institute of Finance, argued in an article that singles out Bitcoin BitcoinUSD and ether 
Spot cryptocurrency ETFs could undermine financial stability
The researcher argued that the introduction of spot cryptocurrency ETFs in the country could harm its financial stability. According to the document, when spot ETFs are approved – and digital asset prices rise – a significant amount of capital will flow into the cryptocurrency market.
Lee argued that this would lead to inefficiencies in resource allocation. The researcher also noted that the liquidity of financial markets and the health of financial companies will worsen when prices fall.
For this reason, the researcher said the country needs to carry out further research into the potential losses and benefits of introducing spot cryptocurrency ETFs. Currently, the researcher claims that the losses will be greater than the benefits that could be obtained.
Lee also said that there is still a lack of understanding of the value of digital assets and that the assets have high volatility. The researcher argued that the introduction of such products would lead market participants to believe that they are “proven assets”.
Furthermore, Lee said the risks will increase. The researcher said that regulatory measures must be well prepared to reduce such risks. Lee added that the impact of digital assets on investors and the financial market is still uncertain. Regulators need to prepare sufficient measures before introducing cryptocurrency spot ETFs.
South Korea requires exchanges to review token listings
South Korea’s financial regulator is tightening its cryptocurrency rules to protect users. Starting July 19, cryptocurrency exchanges registered in the country will be legally required to regulate tokens listed on the exchanges.
Exchanges are tasked with evaluating whether to continue supporting or removing the tokens from their platform. According to the new law, all registered exchanges should review the more than 600 listed crypto assets.
Those who are unable to follow the rules will face serious penalties, including fines and prison sentences.