South Korea's Financial Services Commission (FSC) announced on Thursday, 30 July that it will roll out additional measures to cool the surging single-stock leveraged exchange-traded fund (ETF) market 'as early as possible,' following an emergency inter-agency inspection meeting held the previous night. The move comes amid mounting concern that these high-risk products have amplified market volatility, triggered sharp sell-offs, and caused significant retail investor losses.

What the FSC Plans to Do

The FSC said it will work alongside the Financial Supervisory Service (FSS) to revise the Capital Markets Act, creating the legal framework needed to activate market stabilisation measures. In parallel, the regulator will direct brokerages to impose caps on the maximum amount individual investors can put into single-stock leveraged ETFs, aiming to prevent retail participants from concentrating a disproportionate share of their assets in such instruments.

Separately, financial authorities had already decided to raise the minimum cash deposit requirement for single-stock leveraged ETF investments, a measure set to take effect on Friday, 31 July.

Market Backdrop: KOSPI Volatility and Chipmaker Losses

The regulatory push follows extreme turbulence in South Korea's benchmark Korea Composite Stock Price Index (KOSPI). After breaching 9,000 points in June, the index plummeted to 5,593.56 points by Thursday — a dramatic reversal driven in large part by heavy losses at the country's two dominant chipmakers, Samsung Electronics and SK hynix, amid renewed concerns over artificial intelligence spending.

Single-stock leveraged ETFs were introduced to the South Korean market on 27 May, and critics argue the product's rapid uptake has exacerbated the index's swings. This is the first major regulatory intervention since their launch.

Crypto Fraud Case: 12.3 Billion Won XRP Scam

In a separate development, the Seoul Metropolitan Police Agency (SMPA) announced on Thursday that three people have been arrested and one placed on an Interpol red notice in connection with an alleged cryptocurrency fraud that duped 71 investors out of approximately 12.3 billion won (around $8.55 million) in October 2025.

According to the SMPA, the suspects operated a fraudulent platform called 'Fxrpntwork.com', luring victims into depositing roughly 3.4 million Ripple (XRP) coins by falsely promising guaranteed principal returns and fixed monthly yields of 1.5 to 1.8 percent. The scheme was promoted through portal blog posts, online articles, and YouTube videos.

Victims were directed to transfer XRP from domestic exchanges to designated wallets via an overseas exchange. Once the funds were moved, the suspects shut down the site and went into hiding. Police said they launched an investigation last October following intelligence on rising crypto fraud cases, and managed to trace transaction paths and freeze the suspects' crypto wallets within three days of receiving the initial tip-off, limiting further investor losses.

What Happens Next

The FSC is expected to fast-track the Capital Markets Act revision, with brokerage-level investment caps likely to follow shortly after. Analysts will be watching whether the tighter deposit requirements and position limits are sufficient to stabilise the KOSPI, or whether the regulator will need to consider suspending single-stock leveraged ETF trading altogether. The crypto fraud case is ongoing, with investigators continuing to pursue the one suspect still at large.