Urgent Warning: South Korea Crypto ETF Faces Stricter Exposure Limits

Key Points

1. The FSS's guidance targets crypto-linked firms like Coinbase and MicroStrategy, aiming to curb excessive risk in ETFs.

2. Many South Korean ETFs, such as the ACE U.S. Stock Bestseller ETF (14.59% in Coinbase), exceed the 10% threshold and must rebalance portfolios.

3. The move aligns with South Korea's 2017 policy banning direct crypto investments by regulated financial institutions, now extending to indirect exposure via ETFs.

4. Asset managers face immediate challenges in adjusting holdings, potentially leading to divestments or reduced crypto-linked allocations.

5. South Korea's approach contrasts with more open crypto ETF markets in North America and Europe, highlighting global regulatory divergence.