South Korea is implementing a new regulatory measure aimed at cryptocurrency operators in the country. Effective July 19, the Financial Services Commission (FSC) introduced the ‘Virtual Asset User Protection Act,’ which mandates a supervisory fee based on the operating revenue of South Korean crypto exchanges. This new legislation represents a significant shift in the regulatory landscape for the cryptocurrency sector in South Korea.
Under the new regulations, South Korean crypto exchanges will be required to pay a supervisory fee of approximately 300 million won (about $220,240). This fee is part of the revised ‘Enforcement Decree of the Act on the Establishment of the Financial Services Commission’ and the updated ‘Regulations on the Collection of Financial Institution Contributions.’ The fee structure is based on the exchange’s operating revenue from the previous fiscal year.
Major regulated exchanges such as Upbit, Bithumb, Coinone, and Gopax are now subject to this supervisory fee. The legislation mandates that these exchanges comply with the new financial contributions to cover the costs associated with regulatory oversight and inspections.
Notably, Korbit is excluded from this supervisory fee due to its relatively low operating revenue of approximately 1.7 billion won last year. The FSC’s decision to impose this fee reflects the need to fund the regulatory framework and the costs incurred by the organization overseeing the virtual asset sector.
The supervisory fee can be likened to a quasi-tax imposed on financial institutions, as it is intended to cover the regulatory body’s inspection and oversight services. The introduction of this fee aligns with the broader regulatory strategy to enhance oversight and ensure compliance within the cryptocurrency market.
The new supervisory fee is expected to have a substantial impact on crypto exchanges, particularly those like Coinone and Gopax, which are grappling with ongoing operating losses. The imposition of this fee comes at a time when many exchanges are already facing financial pressures, potentially exacerbating their challenges.
The FSC has indicated that inspections under the Virtual Asset User Protection Act will commence promptly, and the supervisory fee collection will proceed without delay. This move aims to reinforce regulatory supervision and ensure that cryptocurrency operators adhere to the new legal requirements.
South Korea's introduction of a supervisory fee for cryptocurrency operators marks a significant development in the regulation of the digital asset sector. By tying the fee to operating revenue, the FSC aims to create a more structured and accountable regulatory environment. As crypto exchanges prepare to navigate these new financial obligations, the industry will be closely watching how these changes influence operational dynamics and regulatory compliance moving forward.
August 2024, Cryptoniteuae