A Korean think tank is critical of the future impact of spot BTC and ETH ETFs on the local economy

The dust is starting to settle on the cryptocurrency spot ETF craze. This fact perfectly illustrates the quite skeptical attitude towards such funds in countries that are just planning to introduce BTC and ETH ETFs. A Korean think tank warns in its latest report that the introduction of BTC and ETH ETF spot funds may negatively impact the local economy.

A Korean think tank warns against BTC and ETH ETFs

The bearish mood on the cryptocurrency market is starting to become more and more clear. Over the last 7 days, the BTC price has fallen by over 7%, and the cryptocurrency community is eagerly awaiting the bull market that will follow the halving. Many countries that had previously seriously considered introducing spot ETFs based on the most popular cryptocurrencies are beginning to analyze the impact of such a solution on the local economy.

One such country is South Korea, where a Korean think tank recently issued a very critical report. According to the Korean Financial Research Institute, the introduction of cryptocurrency-based spot exchange-traded funds is likely to cause more problems than benefits for the country’s economy. In the report we can read, for example, that:

The approval of (such) products may lead to side effects such as increased inefficiencies in the allocation of resources, increased exposure to risks associated with cryptocurrencies in the financial market and weakened financial stability.

Will a Korean think tank determine the fate of cryptocurrency spot ETFs in South Korea?

The Korean think tank primarily explains in the report that BTE and ETH ETFs can lead to large cash flows destined for the local financial market. This, in turn, may mean less investment for local industries. KIF (Korea Institute of Finance) adds that such a situation may lead to a crisis in the cryptocurrency sector. What the Korean think tank means here is the growing distrust of investors towards the market and regulators.

Currently, Korean regulators do not allow the issuance and trading of spot ETFs based on cryptocurrencies. Interestingly, the left-wing Democratic Party currently ruling in South Korea recently proposed that spot ETFs based on BTC and ETH would be available locally. This is, of course, part of the election campaign.