South Korea’s cryptocurrency giants, including Upbit, Bithumb, and Coinone, are feeling the heat of new regulations. The country’s latest crackdown on the industry is forcing these platforms to dig deeper into their pockets.
In a significant move for the cryptocurrency industry in South Korea, major operators will now be required to pay a supervisory fee under the newly enforced Virtual Asset User Protection Act.
Local media reports estimate the fee, based on operating income, to be around 300 million won ($219,992) for the leading exchanges. This new financial obligation could pose challenges for certain platforms.
On July 1, the Financial Services Commission (FSC) announced the revised “Enforcement Decree of the Act on the Establishment of the Financial Services Commission, etc.” and the updated “Regulations on the Collection of Financial Institution Contributions, etc.”
According to these revisions, virtual asset operators will need to contribute to supervisory fees for inspections conducted by the Financial Supervisory Service (FSS) starting next year.
This move aligns with the Virtual Asset User Protection Act, bringing these operators under the FSS’s inspection scope. The supervisory contribution is based on the previous fiscal year’s operating revenue.
Using the 2024 contribution rate of 2.686818 per 10,000 won of operating revenue, Upbit’s contribution is approximately 272 million won ($199,388), while Coinone and Gopax are expected to contribute roughly 6.03 million won ($4,422) and 830,000 won ($608), respectively.
Korbit is excluded from the supervisory contribution due to its operating revenue of about 1.7 billion won ($1.2M) last year. Only businesses with an operating revenue of 3 billion won or more are subject to this fee, which compensates for the supervision and services provided by the FSS.
The new supervisory fee is a bitter pill for many South Korean cryptocurrency exchanges to swallow. While industry leaders Upbit and Bithumb can shoulder the burden, smaller players like Coinone and Gopax are facing a daunting challenge. Most platforms are still grappling with losses, placing a significant strain on the mandatory fee. The industry was caught off guard by the swift implementation of the fee, accelerated by the looming shadow of Financial Supervisory Service inspections.
https://x.com/nil_lalwani/status/1816891606760640809 To comply with South Korea’s newly enacted cryptocurrency user protection laws, a coalition of 20 local crypto exchanges has initiated a comprehensive review of 1,333 digital currencies over the next six months
