INTERVIEW Korea should approve spot bitcoin ETF to boost crypto growth: HashKey Global

HashKey Global Managing Director Ben El-Baz / Courtesy of HashKey Global

The approval of spot Bitcoin exchange-traded funds (ETFs) will foster Korea's digital asset market and fortify the country's standing on the global stage, a global cryptocurrency exchange executive said.

According to HashKey Global Managing Director Ben El-Baz, prompt legislative action to conclude years of regulatory gridlock will help advance Korea's crypto market — one of the most active and mature in the world, characterized by a high user penetration rate, widespread adoption and large trading volumes.

The use of crypto exchanges for illicit activities, including funding terrorism or espionage by North Korea can be reduced, through more stringent compliance practices of Know Your Customer (KYC) and Anti-Money Laundering (AML), he added.

“If Korea adopts a more proactive stance in approving spot Bitcoin ETF trading, it will help further enhance its cryptocurrency market's growth potential and international competitiveness,” El-Baz said in an interview with The Korea Times.

Korea’s crypto market has significant growth potential, in his view.

“Korea is poised to play a more prominent role in the global cryptocurrency space, underpinned by continued technological innovation and an adaptive regulatory framework.”

Clearer policies outlined as market matures will elevate Korea as a vital bridge connecting blockchain technology with traditional economic models, he added.

“More fintech startups and businesses will accelerate innovation, propelling local economic growth and boosting Korea's competitiveness in the global tech arena.”

HashKey Global is the flagship digital asset exchange under HashKey Group. It offers licensed digital asset trading services to global users. HashKey Global is licensed in Bermuda, one of the largest offshore financial and reinsurance centers in the world. It does not operate in the U.S., mainland China, Hong Kong, or certain restricted countries or regions.

A representation of the virtual cryptocurrency Bitcoin / Korea Times photo by Shim Hyun-chul

Vibrant market

The managing director noted Korean investors’ enthusiasm, as evidenced by active cryptocurrency users constituting over 11 percent of the total population.

“Almost everyone is aware of Bitcoin with younger generations particularly receptive to new projects,” he said.

Further highlighting the market vibrancy is the trading volume of Korean crypto exchanges at times surpassing that of the main stock exchange KOSPI.

Korea consistently ranks among the top three in global crypto trading volume. Korea's crypto market is renowned for its vibrant investor community and technological innovation, holding significant influence on the global stage.”

The strong, unified market sentiment has driven financial regulators to take proactive measures to protect stakeholders, he said.

“The Korean government has adopted a pragmatic and gradual approach to formulating cryptocurrency regulations, ensuring market transparency and security.”

However, challenges persist.

The development of new financial services and products can face hurdles, stifled by a complex regulatory environment.

One example is Korean investors showing relatively low enthusiasm for decentralized self-custody and decentralized finance (DeFi).

Also lingering is the inherent volatility of the cryptocurrency market, coupled with regulatory uncertainty — a recipe for heightened risks.

“The government has implemented numerous measures to protect investors. However, there is still a need to strengthen investor education and develop more robust protective mechanisms to combat market fraud and hacking.”

Spot Bitcoin ETFs

Many countries continue to promote the listing of spot Bitcoin ETFs to adapt to the rapidly changing dynamics of the cryptocurrency market.

Korea embracing the global wave of regulation to categorize the digital coins into a legitimate asset class could, in his view, benefit Korea in several ways.

“The Korean cryptocurrency market transparency and legitimacy can be enhanced, bolstered by a legal framework for compliance and transparency. This, in turn, will strengthen market credibility, encouraging more compliant trading.”

The capital inflows will increase, creating a healthy market in a government-approved investor-friendly environment, he said.

“Approving spot Bitcoin trading will incentivize fintech startups and businesses to innovate, boosting Korea's competitiveness in the global tech arena.”

Robust regulation is crucial for protecting investors. However, equally important is flexible and timely regulatory adjustments to ensure Korea fully leverages its technological and market infrastructure advantages in the cryptocurrency field, in his view.

“Early entry into the spot trading market will help Korea maintain its competitiveness in the cryptocurrency space while gaining an edge in new market trends.”

Compliance

Strengthened implementation of KYC and AML practices is needed for cryptocurrency exchanges to enhance compliance, tied closely to national security issues, he said.

“Key market participants should collaborate with the relevant parties to establish and adhere to clear compliance standards, actively monitor suspicious trading activities, and share information with law enforcement.”

The recommendation was in response to criticism of Binance.

The world's largest cryptocurrency exchange was engaged in illicit activities by North Korea, as well as terrorist groups, raising significant national security concerns in Korea.

Changpeng Zhao, the founder and former chief executive of the exchange, faces a three-year term in prison after he pleaded guilty to not reporting more than 100,000 suspicious transactions with designated terrorist groups.

El-Baz said exchanges can implement user education programs to further raise public awareness of the risks associated with illegal activities.

“The measures can allow exchanges to contribute to building a safe and transparent market environment, alleviating concerns related to national security.”

HashKey Global offers a compliant listing system, trading tools such as LaunchPad, contracts and leverage.

It independently stores customer funds, protected by institutional-grade custody.