In a landmark development for the cryptocurrency industry in South Korea, major cryptocurrency operators such as Upbit, Bithumb, and Coinone will now be required to pay a supervisory fee under the newly enacted Virtual Asset User Protection Act.
Introduction of Supervisory Fees
The Financial Services Commission (FSC) announced on July 1 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.” According to local media, these changes mean virtual asset operators must now contribute to supervisory fees for inspections conducted by the Financial Supervisory Service (FSS) starting next year.
Financial Impact
The leading exchanges are expected to face new financial obligations, with supervisory fees estimated at around 300 million won ($219,992). For instance, based on the 2024 contribution rate of 2.686818 per 10,000 won of operating revenue, Upbit’s fee is approximately 272 million won ($199,388), while Coinone and Gopax will pay roughly 6.03 million won ($4,422) and 830,000 won ($608), respectively.
Exemptions and Challenges
Notably, Korbit is exempt from the supervisory fee due to its operating revenue being approximately 1.7 billion won ($1.2M) last year. Only businesses with an operating revenue of 3 billion won or more are subject to this fee. However, this new requirement poses significant challenges for many virtual asset exchanges, particularly those still operating at a loss, like Coinone and Gopax, adding financial strain to their operations.
Regulatory Compliance
The move to impose supervisory fees was initially expected to be delayed. However, the decision was expedited due to upcoming inspections by the FSS following the enforcement of the Virtual Asset User Protection Act. To comply with South Korea’s new cryptocurrency user protection laws, a coalition of 20 local crypto exchanges will conduct a comprehensive review of 1,333 digital currencies over the next six months.
Conclusion
These regulatory changes represent a significant milestone in South Korea’s approach to cryptocurrency oversight, aiming to enhance user protection and ensure greater scrutiny of virtual asset operators. While larger exchanges like Upbit and Bithumb may be able to absorb these costs, smaller platforms might face increased financial pressure as they adapt to the new regulatory environment.
