South Korea’s Financial Supervisory Service (FSS) has recently advised domestic asset management firms to refrain from excessively including cryptocurrency-related stocks, such as Coinbase and MicroStrategy, in their exchange-traded fund (ETF) portfolios. This guidance, which was delivered verbally to ETF managers earlier this month, reflects the FSS's concern over the growing weight of virtual asset-linked equities in the Korean market. The agency emphasized the importance of maintaining a balanced and stable portfolio composition, warning that current levels of exposure to crypto-linked stocks could undermine investor protection and portfolio soundness. As a result of this advisory, several ETF operators are reportedly reviewing and adjusting their portfolio allocations, shifting away from digital asset-centric strategies toward more traditional and diversified holdings. The FSS clarified that the recommendation is not a formal restriction but a regulatory signal aimed at preemptively managing risk in light of heightened market volatility and global correlation with cryptocurrency markets. Industry analysts interpret this move as a prudent step to curb speculative excesses and reinforce fiduciary responsibility in ETF management.
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