South Korea has to embrace cryptocurrency exchange-traded funds tied to cryptocurrencies to not lag behind the sharp growth of the global virtual asset market, the chief of a local finance association said Wednesday.

"The global virtual asset market is likely to further growth backed by the Trump 2.0 administration's favorable stance toward the investment vehicle," Korea Financial Investment Association Chairman Seo Yoo-seok said at a press conference held at the industry body's headquarters in western Seoul on Wednesday.

The association, also known as Kofia, acts as a self-regulatory organization of the local finance investment industry, representing brokerage houses and asset managers.

"While the virtual asset market is projected to continue its expansion, Korea should not be left out,” he said.

Spot cryptocurrency ETFs remain out of reach for South Korean investors as the country's top regulator the Financial Services Commission has announced the Capital Market Act does not allow virtual assets to be identified as underlying assets for securities.

“Spot cryptocurrency ETFs are already listed on exchanges in the US, Hong Kong, Canada and more,” Seo said. “This year, we will discuss the institutionalization of the security token offering, and continue to request the authorities to allow the listing of virtual asset spot ETFs."

Seo further highlighted the need to pursue the government’s corporate value-up initiative, which calls for listed companies to enhance their corporate value and boost shareholder return.

"The value-up initiative is about more than just boosting the stock prices. It is an integrated strategy that calls for the qualitative growth of the economy and the capital market," Seo said. "Kofia will continue to support the value-up program as a national agenda and for it to settle down as a culture."

Seo further projected the local stock market to expand with the launch of an alternative trading system next month. Korea’s first ATS named Nextrade is set to launch on March 4.

“The new ATS platform will spur market competition,” he said. “The capital market’s infrastructure will experience qualitative growth based on the diversification of traded products and competition,” he said.

Seo, former CEO of the country's leading asset manager Mirae Asset Global Investments, took office as the head of Kofia in January 2023. His three-year term is set to last until the end of this year.

By Im Eun-byel (silverstar@heraldcorp.com)