In a notable shift for South Korea‘s cryptocurrency industry, major cryptocurrency exchanges such as Upbit, Bithumb, and Coinone will now be subject to supervisory fees under the newly implemented Virtual Asset User Protection Act. This new regulatory requirement introduces a financial obligation that could present challenges for some of the leading platforms in the country.
Supervisory Fee
Local media reports estimate that the supervisory fee, which is based on operating income, will amount to approximately 300 million won ($219,992) for the major exchanges. This fee represents a significant new cost for these platforms and could impact their financial stability.
The Financial Services Commission (FSC) revealed on July 1 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.’ Under these revisions, virtual asset operators will be required to pay supervisory fees for inspections conducted by the Financial Supervisory Service (FSS) starting in the coming year.
Key points include:
- Fee Implementation Date: Fees will be collected starting next year.
- Fee Applicability: Only virtual asset operators with an operating revenue of 3 billion won or more are subject to this fee.
- Exemptions: Korbit is excluded from this requirement due to its operating revenue being approximately 1.7 billion won ($1.2 million) last year.
The imposition of these fees comes at a challenging time for many virtual asset exchanges. Despite the broad financial strain felt across the industry, certain exchanges, including Coinone and Gopax, will still be required to pay the supervisory fees. This requirement places additional financial pressure on exchanges that are already grappling with operational losses.
Initially, there were predictions that the introduction of supervisory fees would be postponed. However, the decision to enforce these fees was accelerated due to the impending inspections by the FSS following the enforcement of the Virtual Asset User Protection Act.
In response to the new regulations, a coalition of 20 local crypto exchanges has undertaken a comprehensive review of 1,333 digital currencies. This review, expected to span the next six months, aims to ensure compliance with South Korea’s newly enacted cryptocurrency user protection laws.
| Aspect | Details |
|---|---|
| New Supervisory Fee | Estimated at 300 million won ($219,992) |
| Regulatory Announcement Date | July 1 |
| Enforcement Date | Fees to be collected starting next year |
| Exemption | Korbit is exempt due to lower revenue |
| Financial Impact | Major exchanges facing new financial strain |
| Delayed Fee Imposition | Initially expected but expedited |
| Industry Response | Review of 1,333 digital currencies by 20 exchanges |
The introduction of supervisory fees marks a significant development in South Korea’s cryptocurrency regulatory landscape. While aimed at enhancing user protection, the new fees impose a notable financial burden on many exchanges. The industry’s response, including extensive reviews and compliance efforts, reflects the sector’s adaptation to evolving regulatory requirements.
Featured image credit: Freepik
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