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Retail investors in Korea increased holdings in U.S. bitcoin-related stocks as well as futures and leveraged exchange-traded funds (ETFs), frustrated by the stalled approval of spot bitcoin trading in the country, data showed Friday.
According to the Korea Securities Depository, Korean investors bought $177.82 million (260 billion won) of MicroStrategy, a U.S. business intelligence firm known for its bitcoin holdings, over the past six months.
The firm owns about 450,000 bitcoins. Its share price spiked to over $473, up from around $222, powered by the reelection of Donald Trump, but has since trended down to $331.
The Korean investors bought $140.42 million of the 2X Bitcoin Strategy ETF. Its profit is tied to twice the intraday volatility of bitcoin futures.
One in five derivate holders are Koreans, as inferred from Koreans holding around $649 million of the product’s market capitalization of around $3 billion.
Koreans bought $119 million of the ProShares Ultra Bitcoin ETF. Its profit is tied to twice the price of spot bitcoin trading.
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Korea has yet to revise the Capital Markets Act to negate the Financial Services Commission's (FSC) judgment on Jan. 11 last year that state digital coins do not fall within the definition of “underlying assets.”
The decision was grounds for local brokerages to suddenly halt overseas spot bitcoin ETF trading services that began in 2021, including in Canada, Australia and Germany.
Some even went a step further to halt futures bitcoin ETF services, only to resume after the FSC said the ban would be limited to spot trading.
The resounding victory of the main opposition Democratic Party of Korea (DPK) in the general elections last April fanned hope for an expedited revision since it ran on a platform that the issuance, listing and trading of spot bitcoin ETFs would be allowed.
However, no tangible progress has been made, with the slated tax of 20 percent on gains from the virtual assets, excluding a maximum deductible of 2.5 million won, postponed for two years until 2027.
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