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South Korea raises the deposit threshold for single stock leveraged ETFs to 30 million won, effective from the 31st

According to the Korea Herald, the Financial Services Commission, the Financial Supervisory Service, and the exchange have decided that starting from July 31, the minimum deposit requirement for single stock leveraged ETFs and ETNs will be raised from 10 million KRW (approximately 51,000 USD) to 30 million KRW (approximately 153,000 USD), and only cash will be accepted; stocks, bonds, and other securities will no longer be recognized as collateral. The new regulations apply to both domestic and overseas listed products, and existing investors must also meet the requirements when making additional purchases, but there are no restrictions on selling. In addition, the funds from sales can only be counted as deposits after 2 business days following settlement, and loans secured by the sale proceeds will not count as deposits.The product was launched on May 27, involving 16 underlying assets, with an initial market value of approximately 4.4 trillion KRW, which has expanded to 11.9 trillion KRW as of July 15. Daily trading volume increased from 10.4 trillion KRW on the day of listing to about 13 trillion KRW. Previously, South Korea had suspended the listing of new products and prohibited related advertisements starting from July 16, tightening the discount rate management standard from 3% to 2%. Market rumors suggest that regulators are also considering reducing the number of liquidity providers, widening the bid-ask spread, and lowering the leverage ratio from 2 times to around 1.5 times.

The South Korean Financial Commission responds to the controversy over single-stock leveraged ETFs: there is indeed an effect in preventing capital outflow, but it is not the main cause of stock market volatility

The Financial Services Commission of South Korea responded positively to the recent controversies surrounding single-stock leveraged exchange-traded funds (ETFs) when it released supplementary regulatory measures. Byeon Je-ho, the Director of the Capital Markets Bureau of the Financial Services Commission, clearly stated that launching leveraged ETF products targeting single stocks such as Samsung Electronics and SK Hynix in the domestic market has indeed had a significant effect in locking in domestic investment demand and preventing capital outflow to overseas leveraged markets like Hong Kong or the United States.In response to external accusations that single-stock leveraged ETFs are the "main culprit" behind the recent increase in volatility in the South Korean stock market, the Financial Services Commission refuted this claim. Byeon Je-ho pointed out that the recent dramatic market fluctuations cannot be solely explained by leveraged ETFs, with the core reason being the alternating expectations of the global semiconductor industry cycle. Data shows that from May 26 to July 10, the annualized daily return volatility of U.S. SanDisk (131%), Micron (123%), and Japan's Kioxia (118%) was higher than that of South Korea's SK Hynix (113%) and Samsung Electronics (96%). Additionally, some investors' contrarian operations have played a role in stabilizing stock prices to some extent.Regarding the demands from some politicians and market participants to "forcefully delist single-stock leveraged ETFs," the Financial Services Commission clearly rejected this request. The official explanation stated that delisting must meet statutory termination criteria such as a sharp decline in market value or a lack of liquidity providers (LPs), and currently, the market is showing signs of heating up due to excessive demand, which does not meet the delisting conditions. The Financial Services Commission indicated that such calls should be understood as the market's urgent expectation for strengthened compliance and robust regulatory measures.

Data: Leverage rather than spot demand drives Bitcoin, value and momentum buyers are still on the sidelines

According to a research report by NYDIG, Bitcoin fell by 13.4% in the second quarter of 2026, with the year-to-date decline expanding to 32.9%. In contrast, the Nasdaq 100 index rose by 27.7%, and tech stocks increased by 43.5%, indicating that this round of decline is not due to macro risk aversion, but rather specific supply pressures unique to Bitcoin.The core pressure comes from Strategy (MSTR) launching the "Digital Credit Capital Framework," authorizing the sale of approximately $1.25 billion in Bitcoin to cover capital structure obligations, marking a shift of the largest historical marginal buyer from continuous accumulation to active monetization, with the DAT complex overall transitioning from a demand engine to a supply risk. In terms of ETFs, the U.S. spot Bitcoin ETF saw a net outflow of $4.9 billion in the second quarter, but Morgan Stanley's Bitcoin Trust attracted $364.8 million in inflows against the trend, showing that distribution channels remain competitive.In the derivatives market, amid weak spot demand and continued outflows from ETFs and stablecoins, the positive funding rate combined with a rebound in open interest indicates that leveraged long positions are rebuilding, posing a risk of passive liquidation triggering a new round of declines. Bitcoin has currently fallen 54.3% from its historical high of $126,000 set on October 6, 2025, referencing the cycles of 2018 and 2022 (with a gradually narrowing decline of about 70%).
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