Legal Experts Argue 'Bitcoin Spot ETF is Possible' Despite Opposition
The main reason the financial authorities have stated that a domestic Bitcoin spot exchange-traded fund (ETF) cannot be approved is due to a violation of the current 'Capital Markets Act.' The authorities argue that Bitcoin cannot be regarded as a type of underlying asset defined under the Capital Markets Act. However, the legal community offers a completely different interpretation, suggesting that it ultimately depends on the will of the financial authorities.
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Article 4, Clause 10 of the current Capital Markets Act defines the types of underlying assets. These include: 1) financial investment products, 2) currency (including foreign currencies), 3) general goods, 4) credit risk, and 5) other risks belonging to natural, environmental, or economic phenomena that can be reasonably and properly assessed or priced using indicators, interest rates, or other methods. The Financial Services Commission (FSC) interprets this clause to mean that virtual assets are not included in the investment targets of collective investment vehicles such as ETFs. However, they distinguish Bitcoin futures ETFs, which are currently tradable, as tracking a derivative futures index and, therefore, differing in nature from a Bitcoin spot ETF that involves the actual purchase and holding of Bitcoin.
However, the legal community focuses on Clause 10, Item 5 (assets that can be reasonably and properly evaluated or priced).
Hyeonsu “Elliot” Jin, Managing partner at Decent Law Firm, explained, “Item 5 is a broad provision. Even if Bitcoin does not fall under financial investment products, currency, general goods, or credit risk, it is evident that Bitcoin can be classified as an economic risk that can be reasonably and properly priced, making it at least qualify as an underlying asset.” He further added, “The law only requires a simple condition: that the price of the underlying asset can be reasonably and properly calculated or evaluated.”
