Cryptocurrency exchanges in South Korea have condemned their exclusion by the country’s government from the classification of venture firms. Many platform operators believe the development is not in the best interest of the nascent cryptocurrency industry.
Government Excludes Cryptocurrency Brokers from Updated ‘Ventures and Startups’ Classification
The South Korean government’s decision to exclude cryptocurrency brokers and blockchain startups from the venture firms list has provoked an outcry in the country. Different lobby groups, including the Korea Blockchain Association, Korea Blockchain Industry Promotion Association, and the Korea Blockchain Startup Association have expressed displeasure at the government’s decision. If the revision is legislated, the cryptocurrency industry will join the likes of gambling businesses, public amusement, and drinking establishments in the exclusion list.
In a joint press release, the blockchain industry lobby groups said,
“The measure will discourage the industry as a whole. Blockchain-based virtual currency trading will soon get treated just like gambling and alcohol businesses. If the revision is legislated in the National Assembly, a number of blockchain firms won’t be eligible for various tax benefits. It will discourage their investment and R&D. They will eventually move their base to foreign countries.”
The group’s statement was in response to a revised bill released by the Ministry of SMEs and Startups. The bill excluded businesses trading or brokering cryptocurrencies from the ministry-designed ventures and startups list.
In July, the Financial Services Commission said that it would establish a department exclusively for policymaking initiatives in the country’s blockchain industry. This is contrary to the ministry’s present stance.
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Tetchy Relationship Between Government and the Cryptocurrency Industry in South Korea
This recent exclusion is the latest salvo in the ongoing exchange between the government and the local crypto industry. The government has not been very consistent when it comes to cryptocurrency and ICOs: one day it is banning them, another day it is considering relaxing its regulations. In September 2017, following the footsteps of its Asian neighbor, China, South Korea banned ICOs. On May 28, 2018, the National Assembly proposed to allow domestic ICOs.
In July 2018, financial regulators urged lawmakers to pass cryptocurrency laws to protect investors from under-securitized digital currency exchanges. This was in reaction to a series of cyber attacks that had plagued the country’s crypto market. In that same month, the South Korean government considered revising a law that gave tax benefits to cryptocurrency exchanges.