Cryptocurrency exchanges in Korea say their international competitiveness and ability to attract investors will be adversely affected by a recent Korean government decision to revoke their special status as venture firms, Business Korea reports.
The change will affect all exchanges registering as business from this month forward, and many existing exchanges, including Bithumb, UPbit and Coinone will lose their venture status when their current certifications expire at year end.
Venture status as a business in Korea brings with it a corporate and income tax rates that are half that incurred by other businesses. The firms will also no longer be able to benefit from a 75% acquisition tax, and, “their privileges in securing funding and credit guarantees will disappear.”
An industry source told Business Korea that the approved change means that not only the crypto-trading sector but the entire blockchain industry itself is being treated as “gambling” by legislators:
“The measure implies that the government is regarding not only cryptocurrency exchanges but also every blockchain-related venture firm and business as gambling. The measure will hamper blockchain technology development and developer recruitment for growth of the blockchain industry.”
But GIFTO Blockchain and Cryptocurrency Analyst Doo Wan Nam recently provided an analysis on LinkedIn arguing that Korean crypto exchanges, even in the 2018 crypto bear market, are doing well and, “are still earning huge revenues compared to 2015 and 2016.”
According to Nam, top exchanges Upbit and Bithumb are still handling close to $30 billion dollars in yearly trading volume each and profiting from associated fees.
As well, it was reported in August that the Bithumb crypto exchange made a profit of $35 million USD in the third quarter of this year, after turning a profit of $400 million in 2017.