As a seasoned analyst with over two decades of experience in financial regulation and digital asset markets, I find the implementation of the Virtual Asset User Protection Act in South Korea to be a significant step forward in ensuring the safety and fairness of the crypto market within the region.
In South Korea, with the implementation of the Virtual Asset User Protection Act, cryptocurrency exchanges operating within the area must now remit regulatory fees. These fees are determined according to each organization’s potential earnings.
Based on information from our local news sources, it’s been announced that starting next year, any registered exchange generating an annual income of 3 billion won or higher will be obliged to pay a fee to the government. This fee is for inspections carried out by the Financial Supervisory Service (FSS).
Fee Structure and Payment for Crypto Exchanges
The potential fee for these cryptocurrency platforms like Upbit, Coinone, GOPAX, and Bithumb might reach around $220,000, but it’s important to note that the exact amount will be determined by each company’s earnings. This implies they could end up paying as much as $220,000 or less based on their individual financial performance.
Starting July 19, South Korea enacted the Virtual Asset User Protection Act, granting its Financial Services Commission (FSC) the power to oversee digital asset service providers as needed. Consequently, the FSC declared on Thursday that it will collect supervisory fees from exchanges, with the amount determined by their earnings from the previous fiscal year.
As an analyst, I can share that we have thoroughly examined the financial performance of the impacted exchanges and have imposed fees in alignment with our findings. For instance, Upbit is anticipated to pay approximately 272 million won ($199,592), as per Dunamu’s consolidated financial statements.
Various exchanges such as Bithumb will hand over about 21.14 million Korean Won (equivalent to $15,157 USD) to the financial regulator. On the other hand, Coinone and GOPAX are likely to pay around 6.03 million won ($4,422) and 830,000 won ($608) respectively.
As a researcher, I’d rephrase it this way: Last year, my analysis revealed that Korbit struggled financially, leading to an exemption from fee payments by the regulator. In contrast, Korbit managed to generate an impressive annual profit of approximately 1.7 billion won.
Implementation of the New Supervisory Fees
According to the Financial Services Commission, they will initiate the evaluation process for the financial exchanges right away, but they did not provide a specific schedule for this operation. The recently implemented supervisory fee is in accordance with the updated “Enforcement Decree of the Act on the Establishment of the Financial Services Commission” and the revised “Regulations on the Collection of Financial Institution Contributions.”
The regulator clarified that the charges they levy on exchanges are much like taxes paid by financial institutions in a quasi capacity. Over time, digital financial firms such as Kakao Pay and Naver Financial, along with peer-to-peer (P2P) online investment companies, have been obligated to cover supervisory fees for regulatory oversight.
On the other hand, charging supervisory fees for cryptocurrency exchanges and similar digital asset platforms is a relatively new trend.
Experts within the industry suspect that the new system is an initiative by the government aimed at protecting consumers and discouraging unjust trading activities, given the growing trend towards a digital economy.
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2024-08-01 12:28