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South Korean Democratic and People Power Parties Seeks Exposure to Bitcoin ETF for Political Perks

Politicians pin hopes on Bitcoin ETF to harvest more votes    

With the South Korean parliamentary elections on the horizon, prominent political parties are turning to cryptocurrency-related incentives to win over voters. The opposition Democratic Party has committed to lifting restrictions on domestic and international exchange-traded funds (ETFs) that directly hold crypto tokens, including US Bitcoin ETFs, despite warnings from the country's securities regulator about potential violations of domestic laws. Hwanseok Choi from the Democratic Party affirmed their stance, stating: 

"We're going to allow the ETFs, whether domestic or overseas."

Not to be outdone, President Yoon Suk Yeol's People Power Party has also made a crypto-friendly promise, pledging to postpone the implementation of taxes on digital asset profits until 2025. The significance of the crypto-savvy voter base is evident, with government statistics revealing that nearly six million South Koreans, or 10% of the population, traded crypto via registered exchanges in the first half of 2023. Furthermore, 7% of election candidates have disclosed their cryptocurrency holdings.

Upcoming crypto regulations in South Korea

Despite the political promises, South Korea is preparing for stricter regulations on cryptocurrencies. The country's financial authorities are set to introduce new rules for token listings on centralized exchanges in the coming weeks. These rules will prohibit domestic exchanges from listing digital assets affected by hacking incidents until the root causes are determined. Additionally, foreign digital assets will only be listed on domestic exchanges if a white paper or technical manual is available for local investors.

Moreover, the upcoming Virtual Asset Users Protection Act, set to take effect on July 19, 2024, will ban the use of "undisclosed important information" about crypto, market manipulation, and illegal trading. The government has also issued an update to the Act in February, introducing significant fines and criminal penalties for violations, including imprisonment of more than one year or fines of three to five times the amount of illegal profits.