Some of the largest securities firms in South Korea are on schedule to launch a virtual asset exchange in H1 2023, led by the Financial Investment Association. According to local news, the financial firms have applied for government approval to initiate the exchanges.
An official from one of the securities companies said: "The discussions necessary for the establishment are currently being finalized internally.
"Details could be made after the government announced in the fourth quarter of this year that included provisions of the virtual asset law and deregulation."
The President of South Korea, Yoon Suk-yeol is dubbed as a crypto-pro President. Yoon, a former prosecutor said vowed to allow initial coin offerings (ICO), which will enhance South Korea's position among the crypto-friendly countries.
A member of the People Power Party said that profits of up to $40,000 will not be taxed. Nevertheless, airdrops may still be subject to gift tax, which ranges between 10% and 50%.
Plans to impose 20% on crypto profits were delayed to 2025. Cryptocurrency trading regulations may be introduced in 2023 under the Digital Asset Basic Act.
The Digital Assets Framework Act
The securities companies that are planning to launch an exchange are Samsung Securities, Mirae Asset Consulting, NH Investment & Securities, Shinhan Financial Investment and KB Securities.
KB Bank hinted at the beginning of the year its intention to enter the digital assets markets:
'We plan to prepare for the preemptive launch of related products through domestic and overseas digital asset market research. Considering the speed of adoption of virtual assets in major countries, the company aims to launch products as quickly as possible after deregulation in Korea [led by Yoon].
'Hong-gon Kim, head of KB Asset Management’s Index Quant Management Division, said, “We will launch a virtual asset-themed equity fund, etc. as soon as possible." Periodicals will also be published.'
The Digital Assets Framework Act will differentiate between tokens that are considered as securities (STOs) and non-security tokens including NFTs.
The FIU Took Action against 16 Crypto Exchanges
Although the South Korean government is more open to crypto, it does not necessarily mean exchanges can operate without a required license.
The Financial Intelligence Analysis Unit (FIU), which is operating under the Financial Services Commission (FSC), discovered 16 exchanges that are violating the Special Payment Act.
An FIU official explained the Special Payment Act: "Undeclared virtual asset operators are not adequately equipped with the Information Security Management System (ISMS), which is a reporting requirement under the Special Payments Act and may be exposed to risks such as leakage and hacking of personal information, and may be exploited through money laundering channels."
The 16 crypto exchanges that have been providing services to Koreans without a required license are:
KuCoin
MEXC
Phemex
XT.com
Bitrue
ZB.com
Bitglobal
CoinW
CoinEX
AAX
ZoomEX
Poloniex
BTCEX
BTCC
DigiFinex
Pionex
The FIU warned the exchanges in July 2021 that they are subject to declaration, however, no declaration has been provided.
source: IFU
As a result, the IFU requested the Broadcast and Communications Commission and the Korea Communications Commission to block access to their websites.
Furthermore, the IFU wishes to halt credit card companies from providing services to these exchanges, assuring unlicensed crypto companies will be unable to process credit card transactions.
