South Korean regulators have demanded that the country's ETF stop increasing its holdings in stocks of encryption companies like Coinbase.

According to Techub News and the Korea Herald, the Financial Supervisory Service of South Korea recently issued verbal guidance to domestic asset management companies, instructing them not to increase the holdings of stocks from cryptocurrency companies like Coinbase and Strategy in their ETFs. The regulatory body reaffirmed that the "Emergency Measures Related to Virtual Currency" enacted in 2017 is still in effect, and this administrative guidance explicitly prohibits formal financial institutions from holding, purchasing virtual assets, acquiring related collateral, and engaging in equity investments. Data shows that several products in the currently listed ETFs in South Korea have holdings in virtual asset-related targets exceeding 10%. Among them, the "ACE U.S. Stocks Popular ETF" operated by Korea Investment Trust has a holding of Coinbase at 14.59%. The purpose of the Financial Supervisory Service's guidance is to control the risk exposure of traditional financial products to virtual assets.