The Korean researcher urged users to be cautious with spot ETFs, while sharing financial stability risks.
A recent report from the Korea Institute of Finance warns against widely promoting spot cryptocurrency exchange-traded funds (ETFs) in South Korea, citing The risks outweigh the potential benefits at this time.
An institute researcher named Bo-mi Lee There has been a notable analysis of the recent approval of Bitcoin and Ethereum Spot ETFs in countries such as the United States, Hong Kong, and the United Kingdom.
While these ETFs are attracting growing interest, Mr. Lee argues that the adoption of similar products in Korea is likely to cause disruption. destabilization of the financial system.
The report highlights some key concerns as follows:
- Ineffective resource allocation: If cryptocurrency prices increase, a huge amount of capital could flow into the cryptocurrency market, leading to inefficient allocation of resources.
- Risk of market fluctuations: During periods of falling prices, ETFs can negatively impact financial market liquidity and the financial capacity of institutions.
- Lack of understanding: There is still not enough understanding of cryptocurrency valuations, coupled with high price volatility.
- Early legalization: Introducing cryptocurrency ETFs through traditional financial channels may give investors a false sense of security about them.
Lee urged regulators to do more comprehensive research profits and losses Potentially related to cryptocurrency ETFs. He asserted that at the present time, the disadvantages may outweigh the advantages.
He emphasized the introduction and promotion of cryptocurrency-based products such as underlying assets at this time is extremely dangerous, when understanding of their value is lacking, especially they have high price volatility that can cause investors to get risk.
At a time when virtual assets are growing and various products are widely introduced, there will be limits to establishing regulations and protecting investors because of the negative impact of virtual assets on with them and financial markets still unpredictable.
This cautious stance is consistent with recent efforts by Korean legal authorities to tightening cryptocurrency regulations. Starting July 19, exchanges registered in the country will be legally responsible for Regularly evaluate tokens listed on their platform. The move is aimed at enhancing user protection amid the rapid growth of cryptocurrencies.
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