Firstrevealedby the South Korea’s Ministryfor smalland Medium Enterprises [SME’s] and Startups in Aug., the revision to the lawrequired SouthKorea’s domestic blockchainbusinesses,along withcryptocurrency exchanges, to bemoved fromthe government’s official classified list of certified venturecompanies.
However, as per a recent report at that time, the enactment of the proposal would mean that cryptocurrency startups and exchange platformscanbe a part ofbusinesses from the gambling, bar andshow biz. Quitemerely,the sector would thereby lose tax perks anddifferentmonetaryincentives afforded to domestic startupsand small businesses.
Presently,severalof major Korean exchanges –some ofthe largestwithin thesector including UPbit and Bithumb –staycertified as venturecompaniesbutthat recognitionis readyto expireclose tothe endof the year.
“Thelegislative woulddiscourage the businesses asa whole,” lobbyclustersincluding the Korean Blockchain Association,KoreaPromotion Associationalong with the KoreanBlockchain Startup Association warned at the time,expressingtheir obviousdissatisfactionat theplannedrevision to the law.
In line with the Business Korea this week, the South Korea government hassupportedthe proposal with its legislationwithin theNational Assembly.
The policy,in line withthe report,wouldsee cryptocurrency exchanges face the burden of theircompanyandincome taxes doublingwhilethey’llno longer enjoy a 75 percentcut in the acquisition taxes. Further, cryptocurrency exchangeswould no longer have any privilegeslikecredit guarantees.
“Under the new government policy, cryptocurrency exchangesthat would be established by this month or laterwould not becertified as venturecompanies,” the reportadded, painting a bleak forecastfor new startupscoming intothesector.
The lack of taxadvantagesis definitelyto discourage the analysisand developmentwithin the ecosystemthat would seek to move their base of operations to friendlier jurisdictions abroad.
For instance, Korean exchange Upbitcreateda notablegrowthto Singapore in its1stinternational foray earlier this year with operations tostartthis month.
Earlier Dunamu which is an affiliate of South Korea largestelectronic communicationplatform ‘Kakao’, with support for overa hundredcryptocurrencies at launch, CEO ‘Sigroo Lee’ had a tellingexplainationfor the company’sgrowthbeyondSouth Korea.
Stating further, he stated:
“We felt thetimingwas right to expand globally despitenumerousuncertaintieswithinthe Korean market.”