Regulation
Upbit, Coinone, Bithumb Face New Fees Under South Korea’s Cryptocurrency Law
Following the introduction of the Virtual Asset User Protection Act in South Korea, cryptocurrency exchanges such as Upbit, Bithumb, and Coinone are now required to pay supervisory fees. These fees, estimated to total about 300 million won (about $220,000), are based on the operating income of these companies.
Upbit and other exchanges will pay the supervisory fee
On July 1, the Financial Services Commission announced the revision of the “Executive Decree of the Law on the Establishment of the Financial Services Commission, etc.” and the updating of the “Regulations on the Collection of Contributions from Financial Institutions, etc.” These changes require virtual asset operators to pay supervisory fees for inspections conducted by the Financial Supervision Service starting next year.
Under the new cryptography law
Virtual asset operators are included in the inspection targets of the Financial Supervisory Service. The supervisory fee is calculated based on the operating revenue of the previous fiscal year. For example, using the 2024 contribution rate of 2.686818 per 10,000 won of operating revenue,
Therefore, Upbit is expected to pay around 272 million won ($199,592), according to Dunamu’s consolidated financial statements. Meanwhile, Bithumb’s fee is estimated at 21.14 million won ($155,157). In addition, Coinone and GOPAX are expected to pay around 6.03 million won ($4,422) and 830,000 won ($608), respectively.
However, Korbit is excluded from these fees as its operating revenue last year was about 1.7 billion won. This income is significantly low to charge a fee, according to the new cryptocurrency regulation of South Korea.
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Reason for implementing these rates
The above-mentioned supervisory fees will be implemented starting next year. These fees, similar to a quasi-tax, are charged to financial institutions subject to inspections by the Financial Supervisory Service, including financial companies. In addition, companies with operating revenues of 3 billion won or more are required to pay this fee.
Historically, the payment of supervisory fees by electronic financial companies such as Kakao Pay and Naver Financial and online investment-related finance (P2P) companies has been spread over three years. However, the imposition of supervisory fees on virtual asset operators has been introduced more quickly.
This is likely due to the significant growth of the virtual asset market and the growing focus on preventing unfair business practices. On the contrary, industry insiders had expected a delay in the imposition of these supervisory fees on virtual asset operators, according to a local news agency Navers News.
However, it was reported that the decision was made quickly by the Financial Supervisory Service. A financial authority official said: “The related organization has already been established and costs are being incurred, so the imposition of the supervisory fee is necessary.”
While Upbit and Bithumb are best positioned to handle these fees, many others cryptocurrency exchanges are operating at a loss. Since the supervisory fee is determined based on operating revenue, Coinone and GOPAX, which are incurring losses, will still have to pay the fee. Previously, these South Korean exchanges, including Upbit, saw a 30% drop in trading volumes after the implementation of the new law.
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