South Korea is on the verge of passing legislation to legalize security token offerings (STOs), a move insiders and lawmakers claim effectively clears the regulatory blockade against spot Bitcoin ETFs.
The National Assembly is poised to approve amendments to the Capital Markets Act before the year ends. The bill reclassifies tokenized securities as legitimate financial instruments—dismantling the Financial Services Commission’s (FSC) long-standing argument that digital assets cannot serve as underlying assets for investment products.
Local outlet Hanz Kyungjae reported that the bill has bipartisan support from both the ruling People Power Party (PPP) and the opposition Democratic Party.
“If the bill passes without major friction, politicians think this will accelerate the passage of subsequent legislation, including bills relating to stablecoin and crypto exchange-traded fund approvals,” the report noted.
Bitcoin traded at $91,244 at press time, up 0.5% on the news.
The “Kimchi Premium” Killer?
For years, South Korean regulators suffocated the local crypto market with a “one exchange, one bank” rule and a total ban on spot ETFs, forcing traders into a closed ecosystem that bred the infamous “Kimchi Premium”—where local prices exceeded global averages due to isolation.
The new framework does more than just digitize stocks. By formally recognizing distributed ledger technology within the securities law, the FSC loses its primary legal shield against approving the spot Bitcoin ETFs already trading in the U.S. and Hong Kong.
“We lack the ability to trade in companies that aren’t listed on major stock exchanges,” Seoul-based trader Yoon Ji-ho told reporters. “Of course, we want to have these kinds of options at our disposal.”
The Outlook
The bill heads to the Legislation and Judiciary Committee next. With the opposition Democratic Party—which recently agreed to delay crypto taxation until 2027—holding a majority, passage is all but guaranteed during the final plenary session of 2025.
