After years of resistance, South Korea is preparing for a decisive change in its approach to digital assets. As part of its newly outlined 2026 Economic Growth Strategy, the government has confirmed plans to approve spot Bitcoin and other cryptocurrency exchange-traded funds, signaling a clear move toward integrating crypto into the country’s regulated financial system.
The announcement represents a sharp break from South Korea’s historically conservative stance on crypto investment products and positions the country to rejoin a global trend it has largely watched from the sidelines.
Laying the Legal Foundation for Crypto ETFs
At the heart of the plan is a review of the Capital Markets Act, which currently does not recognize cryptocurrencies as eligible underlying assets for ETFs. Regulators are now evaluating amendments that would allow digital assets—starting with Bitcoin—to form the basis of exchange-traded products.
Officials say the process will involve detailed assessments of custody standards, pricing mechanisms, and investor protections. These reviews are seen as essential steps before any ETF approvals can move forward.
While crypto ETFs have long been prohibited in South Korea, regulatory discussions began to accelerate in 2026, reflecting a growing acceptance that outright bans may no longer align with global financial realities.
Global Pressure and Policy Realignment
South Korea’s policy shift mirrors developments in other major markets. The approval of spot Bitcoin ETFs in the United States in 2024, followed by Hong Kong in 2025, helped legitimize crypto ETFs in the eyes of regulators worldwide.
Those products saw rapid adoption, with trading volumes quickly reaching billions of dollars per week. Their success demonstrated that crypto ETFs could operate within regulated frameworks while attracting both institutional and retail investors.
U.S. regulators later approved spot Ethereum ETFs, further expanding the market and paving the way for altcoin-based funds. Today, the U.S. offers ETFs tied to Bitcoin, Ethereum, Solana, Litecoin, XRP, HBAR, and more, with dozens of additional products under review.
Against that backdrop, South Korea’s long-standing opposition to crypto ETFs began to look increasingly out of step.
Preventing Capital Flight
One of the government’s motivations is economic as much as regulatory. Estimates suggest that nearly $110 billion flowed from South Korea to offshore crypto platforms in 2025 alone. Officials believe that the absence of regulated domestic investment products has pushed capital overseas.
By allowing crypto ETFs within South Korea’s financial system, policymakers hope to keep more investment at home while offering investors safer, regulated alternatives to offshore platforms.
The move also aligns with broader plans to regulate stablecoins, including licensing requirements and reserve rules, as well as expanding the use of blockchain technology in public finance.
Market Infrastructure Ready
The Korea Exchange (KRX) has already indicated it is operationally prepared to list and trade crypto ETFs and related derivatives once regulatory approval is granted. Initial expectations pointed to late-2025 launches, but extended debates over stablecoin governance and investor safeguards pushed the timeline into 2026.
With the infrastructure in place, approvals could move quickly once legislative changes are finalized.
A Long-Awaited Shift
South Korea has long maintained one of the world’s strictest crypto regulatory environments, despite being an early adopter of digital asset trading frameworks. Authorities consistently rejected calls for crypto ETFs, citing volatility and investor protection risks.
However, after nearly three years of successful crypto ETF trading in global markets—and with major financial institutions helping normalize these products—the political calculus appears to have changed.
South Korea’s new direction suggests a growing belief that regulated access, rather than exclusion, offers the best path forward. If implemented as planned, the approval of spot Bitcoin and crypto ETFs in 2026 could mark a defining moment for the country’s digital asset market, bringing it closer to the global mainstream after years on the sidelines.