The government of South Korea has announced that the legislative proposal excludes the cryptocurrency and blockchain industry from being approved as venture firms. The first proposal was suggested by South Korea’s Ministry for Small and Medium Enterprises (SMEs) and Startups in August. Afterwards, there has been the revision to the law requested for domestic Korean blockchain and crypto industry to be deleted from the government’s official certified venture firm lists.
This result has come from the concerns that cryptocurrency startups and exchange platforms will be used for gambling, bar and entertainment industry and there will be loss of tax perks and other financial incentives which are necessary to domestic startups and small businesses.
Several major Korean exchanges including UPbit and Bithumb were approved as venture firms recently but this case is also running toward to the expiration in the end of the year. The Korea Blockchain Association, Korea Industry Promotion Association and the Korea Blockchain Startup Association showed unpleasance to the proposed revision and stated that this decision will discourage the whole industry.
The South Korean government has agreed upon the proposal with its legislation in the National Assembly. Cryptocurrency exchanges will take charge of doubled corporate and income taxes even they have to go through no income from 75% cut in acquisition taxes. Moreover, crypto exchanges will no longer available to possess credit guarantees. It is obvious that newly set up crypto exchanges this month or later cannot be verified as venture firms in accordance with the new government policy. The shortage of tax benefits is inevitable which will be a cause to lose heart for research and development and let those to seek for better settings. It has already happened in Korea that Upbit made a huge expansion to Singapore. Dunamu which is teamed with Kakao, Korea’s biggest messaging platform, also reached a successful expansion beyond Korea. The CEO of Dunamu said, “We did not miss the right timing to become a global company regardless of fears toward various uncertainties in the Korean market.
Author: Jieun Lee