In an effort to mitigate exposure to foreign cryptocurrencies, South Korea’s Financial Supervisory Service (FSS) has advised local asset managers to limit their ETF holdings in stocks like Coinbase and Strategy.
According to a report from a local publication on July 23, 2025, the FSS emphasized the need for compliance with the 2017 administrative guidelines on virtual currencies.
An FSS representative was quoted saying, “Despite recent trends towards deregulation in the U.S. and Korea, specific laws or guidelines are still absent, which necessitates adherence to existing protocols until new regulations are established.”
Furthermore, the FSS’s recommendations also restrict financial institutions from holding, investing in, or accepting virtual assets as collateral, a rule that has been in place since 2017, prompted by concerns over money laundering risks associated with corporate trades of cryptocurrencies.

Quote:
“The FSS has advised asset managers to limit exposure to stocks related to crypto, such as @coinbase and Strategy, in ETFs. Existing emergency measures from 2017 are still applicable.”
— The Coin Republic (@TCR_news_) July 23, 2025
An industry expert remarked, “Although regulatory leniency is on the rise in both the U.S. and Korea, there’s still no formalization of laws or guidelines.”
This guidance comes amid growing concerns regarding the increasing presence of cryptocurrency-related stocks within local listed ETFs in South Korea. Many of these products contain over 10% of their portfolios in virtual asset-related stocks. For example, the ACE US Stock Bestseller ETF holds about 14.59% in Coinbase.
Industry leaders have flagged challenges in excluding stocks from ETFs without compromising index fidelity, stating that arbitrary exclusions could drastically alter the gap rate.
The experts cautioned that prohibiting Korean products alone will not restrict fund flows, as many investors might pivot towards international alternatives like U.S.-listed ETFs.
Quote:
“Restricting only Korean products won’t stem fund flows. Many are simply shifting to overseas vehicles, raising doubts about the policy’s impact.”
In response to the FSS’s advisory, it remains to be seen how this will affect the regional and global integration of South Korean cryptocurrency exchanges, as tensions between regulatory clarity and market adaptability continue to unfold.