Upbit, Coinone, Bithumb Face New Fees Under South Korea’s Crypto Law

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As a seasoned researcher with years of experience in the financial sector and a keen interest in the digital asset landscape, I find myself intrigued by the latest developments in South Korea’s crypto space. The introduction of the Virtual Asset User Protection Act and subsequent supervisory fees for exchanges like Upbit, Bithumb, Coinone, and others, is a significant step towards regulatory clarity and market maturity.

As a result of the implementation of the Virtual Asset User Protection Act in South Korea, crypto exchanges like Upbit, Bithumb, and Coinone now find themselves obligated to pay regulatory fees. These fees, which sum up to approximately 300 million won (or around $220,000), are calculated based on the earnings of these companies from their operations.

Upbit & Other Exchanges To Pay Supervisory Fee

On July 1st, the Financial Services Commission unveiled revisions to the ‘Enforcement Decree of the Act on the Establishment of the Financial Services Commission, etc.’ and updates to the ‘Regulations on the Collection of Financial Institution Contributions, etc.’. Beginning next year, virtual asset operators will be required to pay supervision fees for inspections carried out by the Financial Supervisory Service, as stipulated in these changes.

Under the latest cryptocurrency regulation, operators of virtual assets are now under the scrutiny of the Financial Supervisory Service. The supervisory fee is determined by taking a percentage from the revenue earned in the preceding fiscal year. For instance, using the rate of 0.2686818% for the year 2024, this fee would be calculated based on every 10,000 won of operating revenue.

Based on Dunamu’s financial statements, Upbit is projected to pay around 272 million Korean won (equivalent to about $199,592). Simultaneously, Bithumb’s fee is estimated at roughly 21.14 million Korean won ($155,157). Additionally, Coinone and GOPAX are anticipated to pay approximately 6.03 million won (about $4,422) and 830,000 won (around 608 KRW), respectively.

Despite this, Korbit isn’t subject to these charges because its earnings from the previous year amounted to approximately 1.7 billion won. Given that this revenue is relatively small under South Korea’s recently implemented cryptocurrency regulations, it doesn’t meet the criteria for a fee to be imposed.

Reason For Implementation Of These Fees

Starting from next year, there will be introduced a type of fee that’s similar to a tax for supervision, which will apply to financial institutions under the Financial Supervisory Service’s scrutiny, such as banks and large corporations with an annual revenue of 3 billion won or more. These businesses will be required to pay this fee.

From a historical perspective, the fee structure for supervision in electronic financial sectors, including Kakao Pay, Naver Financial, and P2P online investment firms, was stretched across a period of three years. Conversely, the introduction of supervisory fees for virtual asset operators has been accelerated with more immediate implementation. As a researcher studying this field, I’m intrigued by the contrast in timelines between traditional electronic financial companies and their counterparts dealing in virtual assets.

As a researcher, I’ve noticed a trend that seems to suggest the delayed implementation of regulatory fees for virtual asset operators might be due to the burgeoning virtual asset market and the heightened emphasis on combating unjust trading practices. Contrary to expectations, this delay was not foreseen by industry experts, as reported by News Navers, a local news outlet.

The Financial Supervisory Service acted quickly to make a decision, as a representative explained that since the relevant group had already been established and expenses were already being accrued, it was essential to impose the supervisory fee.

As someone who has been closely monitoring the cryptocurrency market for several years now, I have witnessed the rollercoaster ride of digital assets and their respective exchanges. From my personal perspective, I believe that while some exchanges like Upbit and Bithumb are better equipped to handle fees due to their financial stability, many other platforms are struggling to maintain profitability. This is particularly true for exchanges such as Coinone and GOPAX, which have been grappling with losses in recent times.

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2024-08-01 08:32