New ‘Quasi-Tax’ Imposed on Exchanges

The Financial Services Commission (FSC) of South Korea has announced an updated regulatory framework following the implementation of the groundbreaking Virtual Asset User Protection Act.

The official announcement on August 1 revealed that major South Korean cryptocurrency exchanges like Upbit, Bithumb, and Coinone will now be required to pay a supervisory fee based on their operating revenue.

This “supervision contribution,” essentially a quasi-tax, is typically levied on financial institutions overseen by the Financial Supervisory Service (FSS). Businesses with operating revenues exceeding KRW 3 billion generally fall under this tax.

Under the Virtual Asset User Protection Act, crypto exchanges will now be subject to FSS scrutiny. The supervisory fee for these companies will be determined by their prior fiscal year’s operating revenue and a predetermined contribution rate.

Starting in 2025, all South Korean crypto exchanges will fall under FSS supervision and will be liable for the supervisory contribution. Despite expectations of potential delays, this new fee was swiftly introduced following the passage of the Virtual Asset User Protection Act.

South Korea has recently made headlines with its proactive approach to crypto regulation. While the country has been exploring a crypto tax since 2023, its implementation has been repeatedly postponed, primarily due to concerns about the potential impact on individual investors.

In response to calls for crypto-friendly regulations, South Korea has unveiled a new collaborative initiative designed to combat escalating crypto threats and align with international financial standards.