Regulation
Upbit, Coinone, Bithumb Face New Fees Under South Korean Cryptocurrency Law
Since 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 a monitoring fee. The fee, estimated at around 300 million won (around $220,000), is based on the companies’ operating income.
Upbit and other exchanges must pay monitoring fees
On July 1, the Financial Services Commission announced the revised “Enforcement Decree of the Law on the Establishment of the Financial Services Commission, etc.” and the updated “Regulations on the Collection of Contributions from Financial Institutions, etc.” These changes require virtual asset operators to pay supervision fees for inspections conducted by the Financial Supervisory Service starting next year.
Under the new cryptography law
Virtual asset operators are included in the inspection targets of the Financial Supervisory Service. The supervision 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,
According to Dunamu’s consolidated financial statements, Upbit is expected to pay approximately 272 million won ($199,592). Bithumb’s fees are estimated at 21.14 million won ($155,157). Additionally, Coinone and GOPAX are expected to pay approximately 6.03 million won ($4,422) and 830,000 won ($608), respectively.
However, Korbit is excluded from the fee because its operating revenue last year was about 1.7 billion won. That revenue is significantly lower than the fee, according to the new Regulation of cryptocurrencies from South Korea.
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Reason for implementing these fees
The above-mentioned supervision fee will be implemented starting next year. The fee, which is similar to a quasi-tax, is charged to financial institutions subject to inspections by the Financial Supervisory Service, including financial companies. In addition, companies with a turnover of 3 billion won or more are required to pay the fee.
Traditionally, the payment of supervision fees by e-finance companies such as Kakao Pay and Naver Financial and online investment-linked financing (P2P) companies was spread over three years. However, the imposition of supervision 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 increasing focus on preventing unfair business practices. On the contrary, industry insiders had anticipated a delay in imposing these monitoring fees on virtual asset operators, according to a local media outlet Navers News.
However, it was reported that the decision was made quickly by the Financial Supervisory Service. An official of the financial authority said: “The organisation concerned has already been set up and costs are incurred, which is why the imposition of a supervisory share is necessary.”
While Upbit and Bithumb are better positioned to handle these fees, many others crypto exchanges are operating at a loss. Since the monitoring fee is determined based on operating revenue, Coinone and GOPAX, which are making losses, will still have to pay the fee. Previously, these South Korean exchanges, including Upbit, saw a 30% drop in trading volumes after the new law was implemented.
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