Regulation
Regulatory barriers to cryptocurrency donations at Korean universities
Due to strict financial regulations, South Korean universities face difficulties in profiting from cryptocurrency donations. Despite receiving large donations of cryptocurrencies, these institutions cannot convert these assets into cash, hampering their ability to use them effectively.
Local media reports that several South Korean virtual asset companies have donated self-issued cryptocurrencies to universities. However, financial authorities have imposed restrictions that prevent universities from opening the corporate accounts needed for crypto transactions.
Financial authorities will advise university to avoid crypto donations
An official from the Korean Financial Intelligence Unit (KOFIU) under the Financial Services Commission (FSC) explained that the Ministry of Education and KOFIU are unlikely to allow universities to open corporate accounts for crypto transactions. The move follows requests from universities seeking approval to convert large crypto donations into cash.
Universities need a real-name account on a virtual asset exchange to convert donated cryptocurrencies into Korean won. However, local financial authorities have asked banks not to open such accounts to national companies and institutions. They are concerned that business accounts under a legal name are not considered real name accounts, which poses a problem a high risk of money laundering.
Learn more: How to donate crypto using the donation block
Although the Act on Reporting and Use of Specified Information on Financial Transactions does not explicitly prohibit corporate accounts, financial authorities limit them to certain government agencies for purposes of public interest.
“After discussions with relevant ministries, including the Ministry of Education, we have decided not to allow universities to open corporate accounts. Allowing it only for universities would create fairness issues with other companies, and allowing it for all companies would pose too high a risk of money laundering,” said a senior official at the Korea Financial Authority. declared.
The concern arises from the ease with which companies can be formed and dissolved in Korea. This increases the risk of shell companies laundering illicit funds through cryptocurrency-to-cash conversions. Moreover, the highly volatile nature of crypto could have a negative impact on the financial stability of companies involved in such transactions.
In light of these concerns, financial authorities and the Ministry of Education are considering advising universities against accepting crypto donations in the future. However, depending on specific conditions, they consider an exception for converting previously received donations into cash. This route could help universities manage crypto donations which have already been received.
This development follows a review of the law on donations earlier this month. The revision expands the types of assets that citizens can make a donation to charitable associations. However, despite the growing popularity of digital assets in the country, cryptocurrencies like Bitcoin remain excluded from the market. Don scope.
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Result of the KOFIU cryptographic investigation. Source: KOFIU
According to a recent KOFIU report, Crypto user base in South Korea grew by 390,000 in 2023, reaching a total of 6.45 million users. The average daily trading volume in the country also reached 3.6 trillion won, an increase of 24 percent from the first half of the year.
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