South Korean crypto exchanges are facing new regulations that would require them to pay supervisory fees. The Financial Supervisory Commission announced that virtual assets operators must pay fees for inspections performed by the Financial Supervisory Services starting next year. Crypto exchanges would face additional financial burdens amid their losses. This comes amidst a decline in trading volumes for South Korean exchanges, which has seen a 30% drop since the new law was implemented.
Under the revised South Korean crypto regulations, Upbit, the largest exchange would have to pay the most at an estimate of around 272 million won. Meanwhile, smaller exchanges like Coinone and GOPAX are expected to pay less, but their fees are expected to be around 6.03 million wons and 830,000 wons, respectively.
Only Korbit is exempted from these fees, taking into consideration its operating revenue is much lower compared to its competitors.
This new supervisory fee is part of the Protection of Virtual Asset Users Act, which aims to establish a secure environment for cryptocurrency users and enhance market order. These new regulations have sent ripples across the cryptocurrency market, causing significant declines in trading volumes on major exchanges. Exchanges like Upbit, Bitthumb, Coinone, and Korbit all experience a 20-30% dip in their trading volumes, with Korbit taking the greatest hit, a 38.4% decrease in its trading volume. These hits have shown us how sensitive the market is to regulatory changes.
This regulatory law would definitely pose significant challenges for many virtual asset exchanges. While bigger firms like Upbit and Bithumb might be unaffected by the new regulations, smaller firms would continue to suffer under greater operational losses, which adds additional financial pressures to their strained operations. But I would like to argue that while the short term impact might be considerable, the long-term benefits of a more secure and transparent crypto trading environment could help stabilise and legitimize the market could be worth looking forward to.
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