In a significant 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 as part of the newly enforced Virtual Asset User Protection Act.
According to local media, the levied fee based on operating income is estimated to be around 300 million won ($219,992) for the leading exchanges. This marks a new financial obligation that could pose challenges for specific platforms.
Supervisory fees under new regulations
The Financial Services Commission (FSC) announced on July 1 the revised “Enforcement Decree of the Act on the Establishment of the Financial Services Commission, etc.” and the revised ‘Regulations on the Collection of Financial Institution Contributions, etc.'
According to these revisions, virtual asset operators will be required to contribute to supervisory fees for inspections conducted by the Financial Supervisory Service (FSS) starting next year.
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This move brings virtual asset operators under the FSS’s inspection scope in line with the Virtual Asset User Protection Act. The supervisory contribution for these operators is determined by the contribution rate based on the operating revenue of the previous fiscal year.
Using the 2024 contribution rate of 2.686818 per 10,000 won of operating revenue, Upbit’s contribution is approximately 272 million won (199,388), while Coinone and Gopax are expected to contribute roughly 6.03 million won ($4,422) and 830,000 won ($608), respectively.
Exempt from supervisory fee
Notably, Korbit is excluded from the supervisory contribution target due to its operating revenue of approximately 1.7 billion won ($1.2M) last year. This fee is a return for the supervision and services provided by the FSS. 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. Most, except for Upbit and Bithumb, continue to suffer operating losses. Despite these losses, exchanges like Coinone and Gopax will still have to pay the supervisory share, adding financial pressure to their strained operations.
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Initial industry predictions were that the imposition of supervisory fees on virtual asset operators would be delayed. However, the decision to impose these fees was expedited due to the imminent inspections by the FSS following the enforcement of the Virtual Asset User Protection Act.
In a bid to comply with South Korea’s newly enacted cryptocurrency user protection laws, a coalition of 20 local crypto exchanges has embarked on a comprehensive review of 1,333 digital currencies over the next half-year.
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