According to Odaily, the Korea Institute of Finance (KIF) has expressed concerns over the potential introduction of cryptocurrency spot Exchange-Traded Funds (ETFs) in South Korea. In its latest report, the institute warned that such a move could lead to more problems for the country's economy rather than benefits.
The KIF stated in a report last week that allowing such products could result in side effects such as inefficient resource allocation, increased risks associated with cryptocurrencies in the financial market, and weakened financial stability. The institute explained that cryptocurrency ETFs could lead to a large amount of cash flow from the local financial market being intercepted by the crypto market, resulting in reduced investment in local industries.
The KIF added that this could make the local financial market more susceptible to crises in the crypto industry, leading to increased distrust among investors towards the market and regulatory bodies. The report concluded, 'At this point, we believe that the introduction of (cryptocurrency spot ETFs) does more harm than good.'
Despite these concerns, the think tank acknowledged that if the underlying cryptocurrencies develop into more clear and unique financial assets, cryptocurrency ETFs could become a high-quality value storage method.