South Korean Crypto Exchanges Hit with Surprise Supervisory Fees

Key takeaways:

• Major crypto operators like Upbit, Bithumb, and Coinone will now have to pay a supervisory charge as part of the recently imposed Virtual Asset User Protection Act in South Korea.
• These changes stipulate that virtual asset operators will have to pay supervisory fees for Financial Supervisory Service (FSS) inspections as of next year.

Major crypto operators like Upbit, Bithumb, and Coinone will now have to pay a supervisory charge as part of the recently imposed Virtual Asset User Protection Act, which is a significant milestone for the crypto business in South Korea. 

The leading exchanges are expected to charge a fee based on operating income, which is projected to be approximately 300 million won ($219,992), according to a report from local media. This represents a new financial commitment that specific platforms may find challenging to meet.

The amended “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.” were made public by the Financial Services Commission (FSC) on July 1.

These changes stipulate that virtual asset operators will have to pay supervisory fees for Financial Supervisory Service (FSS) inspections as of next year.

In compliance with the Virtual Asset User Protection Act, this action places virtual asset operators under the purview of the FSS’s inspection authority. The contribution rate depending on the operational revenue of the preceding fiscal year, determines the supervisory contribution for these operators.

Upbit’s contribution is estimated to be around 272 million won (199,388) based on the 2024 contribution rate of 2.686818 per 10,000 won of operating revenue. Coinone and Gopax are anticipated to contribute approximately 6.03 million won ($4,422) and 830,000 won ($608), respectively.

The initial industry consensus was that there would be a delay in imposing supervisory costs on virtual asset operators. But the FSS’s impending inspections after the Virtual Asset User Protection Act went into effect prompted the decision to charge these fees.

Over the course of the next six months, a group of 20 regional crypto exchanges will thoroughly examine 1,333 virtual currencies in an effort to comply with the recently passed user protection legislation regarding cryptocurrencies in South Korea.