[INTERVIEW] Korea's slow embrace of spot Bitcoin ETF hurts market, tech leadership: Bybit official

By Lee Kyung-min

Korea remains slow to embrace spot Bitcoin exchange-traded funds (ETFs) compared to more financially advanced crypto markets, which undercuts the otherwise exceptional growth potential and overall market vibrancy, a noted cryptocurrency expert said.

Korea's technological competitiveness in the increasingly globalized cryptocurrency market will stagnate, impeded by the financial regulator’s concerns over crypto volatilities and ensuing risks to market stability, according to Shunyet Jan, Bybit's head of derivatives business and institutional sales.

Bybit is the world’s second-largest crypto exchange by trading volume, entering its sixth anniversary.

Further clouded and elusive will be the prospect of spurred trading volumes on exchanges at the expense of Korea’s standing as a leading market for cryptocurrency trading.

Prompt and full embracement of regulatory standards in line with Korea's advanced peers, including the United States and Hong Kong, would facilitate cross-border investments, the expert said. This, in turn, will fortify Korea's integration within the global crypto community, ultimately paving the way for enhanced economic growth and technological advancement.

“Accelerating the regulatory processes for spot bitcoin trading could substantially enhance Korea's position within this arena,” Jan said in an interview with The Korea Times.

The approval would likely attract institutional investors seeking regulated investment vehicles, increasing market liquidity and stability.

Also enhanced will be a robust regulatory framework-oriented investor protection through compliance measures such as know your customer and anti-money laundering protocols.

These initiatives will foster a more trustworthy trading environment, ensuring that individual investors are better safeguarded to the benefit of the broader financial ecosystem in the process.

“The advantages of approving spot bitcoin trading extend beyond mere market legitimacy and investor protection. By adopting such measures, Korea could stimulate innovation within its fintech sector, encouraging both startups and established firms to explore new financial technologies.”

Vibrant market

The Korean cryptocurrency market remains volatile. However, Jan noted that equally strong are areas of growth potential, aided by its technological leadership, willingness to address regulatory exploits and high retail engagement.

“With the Korean won consistently ranking among the top currencies in global crypto trading, robust local demand is evident. Approximately 12 percent of Koreans, or around 6.45 million, actively trade cryptocurrencies, indicating a receptive retail market poised for further expansion.”

Also notable is increasing institutional interest, as highlighted by significant transactions and the kimchi premium, which reinforces the growth outlook and positions Korea as a key player in the global cryptocurrency ecosystem.

However, headwinds abound.

Stringent regulations, such as restrictions on trading for non-nationals and a ban on initial coin offerings, aim to protect investors. However, they may simultaneously stifle innovation and limit market accessibility, he said.

Further compounding this issue is the market's speculative nature, contributing to significant volatility, deterring cautious investors and leading to rapid price fluctuations.

“Although there are ongoing efforts to enhance investor protection, critics say that these measures often prioritize compliance over fostering innovation, leaving retail investors with insufficient safeguards.”

These regulatory constraints limit arbitrage opportunities, exacerbating persistent price premiums and undermining overall market efficiency.

“We foresee a significant growth potential in the Korean crypto market, fueled by a risk-taking culture and technological adoption. Future success will depend on evolving regulatory frameworks that balance investor protection with innovation, ultimately stabilizing the market and enhancing its integrity as it navigates ongoing challenges."

Options trading in APAC

Jan said he seeks to enhance derivatives offerings, as leveraged by his background in traditional finance and high-frequency trading.

“We can craft solutions that cater specifically to the nuanced needs of institutional investors, bridging proven practices from traditional finance with the flexibility and speed of digital assets.”

Options trading in crypto is similar to traditional stock options trading. The difference is that buying and selling options contracts are based on cryptocurrencies, including Bitcoin, Ethereum and other digital assets, as mediated by call options and put options.

Crypto options trading leverages cryptocurrency price movements, hedge portfolios and profit from volatility.

The highly complicated and complex nature of the trading requires deep market knowledge both in crypto and options scheme due to heavy risks.

One significant hurdle is the diverse regulatory landscape across the region, which he said can create uncertainty for institutional participants.

“Bybit is making continuous efforts to foster strong relationships with local regulatory bodies to ensure compliance while advocating for a supportive environment for crypto derivatives and ensuring the platform can navigate these regulations effectively.”

He added the need for market education is growing, prompted by many institutional investors unfamiliar with the dynamics of options trading in the crypto space.

“We will leverage different opportunities with our new and existing clients to demystify options trading and build confidence among potential participants," he said.

The challenges notwithstanding, the benefits of advancing options trading in the Asia-Pacific region are substantial, in his view.

“Bybit can attract more institutional investors seeking regulated and sophisticated trading vehicles,” he said.

“This shift would not only increase market liquidity but also establish a more stable trading environment. Our commitment to refining custody solutions and enhancing liquidity across our platform will further solidify Bybit’s reputation as a trusted partner for institutional clients.”