South Korea is set to introduce a supervisory fee for cryptocurrency operators, calculated based on their operating revenue.
The Financial Services Commission (FSC) of South Korea has implemented the ‘Virtual Asset User Protection Act’ as of July 19. The act mandates that local crypto exchanges pay a regulatory fee of approximately 300 million won (around $220,240). The regulation applies to significant exchanges like Upbit, Bithumb, Coinone, and Gopax.
The FSC revealed on Thursday that these operators will be required to pay a supervisory fee as part of 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.’ These contributions are tied to the exchanges’ operating revenue from the previous fiscal year, ensuring a proportionate financial obligation.
However, smaller platforms like Korbit, which reported operating revenue of roughly 1.7 billion won last year, are exempt from this fee.
An FSC official explained that the fees are akin to quasi-taxes paid by financial institutions, intended to cover the costs associated with regulatory oversight and services. Given the enforcement of the Virtual Asset User Protection Act, the regulator’s inspections, facilitated by these fees, are expected to commence immediately.
This new regulatory burden is anticipated to affect exchanges like Coinone and Gopax, which are already struggling with operational losses. The financial strain from these supervisory fees may pose additional challenges for these platforms as they navigate the evolving regulatory landscape.
South Korea’s Financial Services Commission (FSC) has approved new regulations to enhance investor protection in response to growing concerns over cryptocurrency exchange bankruptcies. Announced on June 25, these rules will take effect on July 19 and require Virtual Asset Service Providers (VASPs) to segregate customer deposits from their operational funds, keeping them in trustworthy financial institutions. This initiative aims to increase investor safeguards, bolstering trust in South Korea’s digital asset market.
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