South Korea’s Financial Watchdog Urges Asset Managers to Cut Crypto ETF and Equity Ties, Citing Coinbase and MicroStrategy Risks

South Korea's Financial Supervisory Service (FSS) has issued informal guidance to domestic asset managers, advising them to reduce their exposure to cryptocurrency-related exchange-traded funds (ETFs) and U.S.-listed digital asset companies. The verbal directive specifically highlighted Coinbase and MicroStrategy as primary concerns, aligning with the regulator's existing restrictions on financial institutions investing in digital asset equities. This move underscores the FSS's cautious stance on crypto-related investments, despite the growing global interest in digital assets. The advisory aims to mitigate potential risks associated with volatile crypto markets, reinforcing South Korea's stringent regulatory framework for financial institutions. As of July 2025, this development signals continued regulatory scrutiny in the crypto space, even as the sector gains mainstream traction elsewhere.

South Korea Warns Asset Managers to Reduce Crypto ETF and Equity Exposure

South Korea's Financial Supervisory Service has issued informal guidance urging domestic asset managers to limit holdings in crypto-related exchange-traded funds and U.S.-listed digital asset companies. The verbal directive specifically named Coinbase and MicroStrategy as exposure concerns, reinforcing the regulator's longstanding prohibition on financial institutions investing in digital asset equities.

The advisory appears contradictory to recent signals of potential regulatory easing, suggesting internal divisions within South Korea's financial policymaking apparatus. Market participants note the FSS maintains its 2017 stance despite evolving cryptocurrency frameworks in both South Korea and the United States.

Regulatory sources emphasize existing guidelines remain binding regardless of shifting market conditions. The MOVE comes as global institutions increasingly integrate crypto assets into traditional investment portfolios, creating tension between innovation and risk management priorities.

South Korea’s Financial Overseer Urges Firms to Rethink Crypto Strategies

South Korea’s Financial Supervisory Service (FSS) has issued verbal warnings to local asset management firms, urging caution regarding cryptocurrency exchange-traded funds and US-listed firms like Coinbase. The FSS reinforced its 2017 policy, which prohibits regulated financial institutions from holding direct or indirect stakes in crypto assets.

Despite growing interest in Bitcoin-focused funds abroad, South Korean authorities maintain strict adherence to existing regulations. The warnings were delivered directly to institutions, emphasizing that investment strategies must align with these boundaries.