South Korea’s Financial Supervisory Service has instructed domestic asset managers to reduce holdings in crypto related stocks like Coinbase and MicroStrategy, especially within ETFs tracking U.S. indices. Although the guidance is informal, managers report internal pressure to rebalance portfolios to avoid touted crypto risk.
ETF limitations present practical challenges, as removing these shares would create tracking errors without index updates. Critics argue that local restrictions may be ineffective given broader access via U.S. based products. Still, the regulator’s message is clear: keep crypto exposure conservative until regulatory frameworks evolve. Firms are now weighing whether voluntary exposure caps or index adjustments better align with compliance and capital preservation goals.
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