South Korean financial regulatory agencies limit the investment ratio of ETF encryption assets.

According to Deep Tide TechFlow news on July 23, as reported by the Korea Herald, the Financial Supervisory Service (FSS) of South Korea issued verbal guidance to domestic asset management companies earlier this month, requesting to limit the proportion of encryption asset-related companies (such as Coinbase, MicroStrategy, etc.) in ETF portfolios.

The Financial Supervisory Service emphasized that the administrative guidance prohibiting financial institutions from holding, buying, guaranteeing, or investing in encryption assets from 2017 is still effective. Currently, in several South Korean listed ETFs, the proportion of stocks related to encryption assets has exceeded 10%, such as in the “ACE U.S. Stock Bestseller ETF” used by Korea Investment Trust, where Coinbase accounts for as much as 14.59%.

The asset management industry indicates that passive ETFs find it difficult to remove related stocks on their own without changing the index. The industry also questions the effectiveness and fairness of regulatory measures, pointing out that Korean investors have already made indirect investments in encryption assets through U.S. ETFs, and that imposing restrictions solely on domestic ETFs is unlikely to prevent the flow of funds.