In the lead-up to the South Korean election, the topic of Spot Bitcoin ETFs has emerged as a prominent issue within the political landscape. Various political parties, including the ruling Democratic Party and the People Power Party, are actively discussing the legalization of Spot Bitcoin ETFs, reflecting the growing significance of crypto in the financial sector and its potential impact on the country’s economy.
The proposal aims to allow investors to purchase Spot Bitcoin ETFs using their individual savings accounts (ISAs), presenting a significant shift in investment opportunities and regulations.
Bitcoin ETFs rock South Korean politics
Local news media reported Tuesday that South Korea’s opposing Democratic Party is pressing to allow local residents to invest in spot bitcoin exchange-traded funds and to allow financial institutions to start their own spot bitcoin ETFs.
According to Seoul Economy Daily, the party has pledged to allow investors to buy spot bitcoin ETFs using their individual savings accounts. An ISA is an all-in-one account for various investments in funds or equity-linked securities that also provides tax breaks on financial profits of up to two million Korean won ($1,497).
With the revelation, both government and opposition political parties have reportedly pledged to open up spot bitcoin ETF investments and product launches in South Korea before the April 10 general election.
Last month, the country’s financial authority reinforced its restriction on financial institutions launching any type of Bitcoin ETF. Local investors are still barred from participating in spot cryptocurrency ETFs, but overseas crypto futures products remain available.
On April 10, 2024, the Republic of Korea will hold its four-year legislative elections. Regardless of the outcome, the President will not change because they serve five-year terms and are thus elected using wholly different procedures, according to a peculiarity in South Korea’s constitution.
In fact, prior to this election, the party with the most seats did not hold the nation’s highest position and would not be able to compete for it until 2027. Nonetheless, one thing makes these disparities less important from the perspective of a Bitcoiner: both parties have taken the rare step of pledging identical support for Bitcoin.
The future of Bitcoin and Spot ETFs in South Korea
The latest development comes just a day after the People Power Party, which now governs South Korea, was rumored to be considering allowing spot Bitcoin ETFs as part of its campaign commitments for the forthcoming general election in April, reversing its previously antagonistic attitude.
Rumors of a pro-Bitcoin flip for PPP surfaced on February 19, 2024, when party officials told local media that a more complete framework for crypto legislation should become a priority.
They claimed that until this new framework is in place, it may be sensible to eliminate all capital gains taxes on Bitcoin and other cryptocurrencies until applicable legislation is drafted and signed.
However, legislation of this nature would be difficult to pass, and PPP spokesperson suggested that such a tax break may be extended for two years. This appears to be a particularly inept attempt at fishing for votes, especially given that these taxes are still in limbo, but it was not the only one.
Other election promises from the opposition party surpassed those made by the ruling party, as reported a day earlier, including lifting the ban on institutions directly investing in cryptocurrency and raising the threshold for the scheduled tax on crypto gains from 2.5 million won to 50 million won.
But how likely are these leaders to follow through, and what would it mean for South Korea? To answer these questions, consider a few key aspects of their total economy. By many accounts, it’s doing very well. While South Korea has recently suffered inflation, with its monetary supply reaching its highest level since 1970 during the fourth quarter of last year, this figure has dramatically subsided.
Furthermore, its Consumer Price Index (CPI) has weakened in recent months, indicating that the cost of products like housing, food, and energy has been falling in turn.
