South Korea’s Finance Regulator Warns Asset Managers on Crypto ETF Exposure

South Korea’s Financial Supervisory Service (FSS) has informally urged local asset managers to scale back their exposure to cryptocurrency exchange-traded funds (ETFs) and U.S.-listed digital asset companies, according to the Korean Herald.

The regulator reportedly issued verbal guidance to several firms, advising them to limit investments in Coinbase (NASDAQ: COIN) and Michael Saylor’s MicroStrategy (NASDAQ: MSTR). This warning aligns with a longstanding 2017 policy prohibiting regulated financial institutions from directly holding or purchasing equity investments tied to digital assets.

The move comes amid speculation of a potential policy shift in Seoul, as earlier reports suggested regulators were considering easing certain crypto trading requirements. However, the FSS clarified that despite evolving regulatory environments in both South Korea and the United States, current guidelines remain in effect and must be followed.

An FSS official emphasized that financial institutions are expected to comply with the existing framework until formal changes are introduced. The agency did not provide immediate comment on whether further restrictions or updates to the policy are under review.

This development highlights ongoing regulatory caution in South Korea’s approach to cryptocurrency-linked equities and ETFs, even as global markets expand and institutional interest grows.