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Supervisory fees marks a crucial step toward increased regulation and oversight in South Korea's cryptocurrency industry. Major operators such as Upbit, Bithumb, and Coinone will now be required to pay supervisory fees under the newly enforced Virtual Asset User Protection Act.
Local media reports that the levied fee, based on operating income, is estimated to be approximately 300 million won ($219,992) for leading exchanges. This new financial obligation may present challenges for certain platforms.
Supervisory Fees Under New Regulations
On July 1, the Financial Services Commission (FSC) announced revisions to the “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.’ These revisions mandate that virtual asset operators contribute to supervisory fees for inspections conducted by the Financial Supervisory Service (FSS) beginning next year.
This development aligns virtual asset operators with the FSS’s inspection scope under the Virtual Asset User Protection Act. The supervisory contribution is calculated based on the contribution rate applied to the operating revenue of the previous fiscal year.
With the 2024 contribution rate set at 2.686818 per 10,000 won of operating revenue, Upbit’s contribution is estimated at approximately 272 million won ($199,388). Coinone and Gopax are expected to contribute about 6.03 million won ($4,422) and 830,000 won ($608), respectively.
Also read: Ethereum Prices to Lag for Months as Bitcoin Rises
Exemptions from Supervisory Fees
Korbit is notably exempt from the supervisory fee due to its operating revenue of approximately 1.7 billion won ($1.2 million) last year. The fee applies only to businesses with an operating revenue of 3 billion won or more.
This new requirement imposes significant challenges for many virtual asset exchanges. Most, aside from Upbit and Bithumb, continue to face operating losses. Despite these losses, exchanges such as Coinone and Gopax will still need to meet their supervisory fee obligations, adding financial pressure to their already strained operations.
Initially, industry predictions suggested a delay in the imposition of supervisory fees. However, the decision to enforce these fees was expedited due to upcoming inspections by the FSS following the Virtual Asset User Protection Act's enforcement.
In response to South Korea’s new cryptocurrency user protection laws, a coalition of 20 local crypto exchanges has initiated a comprehensive review of 1,333 digital currencies, set to be completed over the next six months.
