The South Korean government has decided to exclude cryptocurrency exchanges from venture firm certification. As a result, cryptocurrency exchanges will see their corporate and income taxes double and cannot benefit any more from a 75 percent cut in acquisition tax. In addition, their privileges in securing funding and credit guarantees will disappear.
Under the new government policy, cryptocurrency exchanges that will be newly set up this month or later cannot be certified as venture firms. The same applies to existing certified exchanges, such as Bithumb, UPbit and Coinone, once their certification expires. For most of them, the certification is scheduled to expire at the end of this year.
The cryptocurrency exchanges are opposed to the measure as it will lead to an increase in cost and hamper investment attraction. They are also concerned about a decline in the competitiveness of the local blockchain industry.
“The measure implies that the government is regarding not only cryptocurrency exchanges but also every blockchain-related venture firm and business as gambling,” said an industry source, adding, “The measure will hamper blockchain technology development and developer recruitment for growth of the blockchain industry.”
In the past, the South Korean game industry, which used to show a rapid growth and account for most of the country’s digital content exports, took a direct hit from the so-called shutdown law, which blocked those aged below 16 from accessing online games for six hours from midnight. Since the implementation of the law, South Korean game companies have failed to recruit skillful developers and have been overtaken by Chinese game companies.