{"id":6909,"date":"2022-04-08T22:58:40","date_gmt":"2022-04-08T22:58:40","guid":{"rendered":"https:\/\/www.sygna.io\/?p=6909"},"modified":"2022-04-14T10:34:55","modified_gmt":"2022-04-14T10:34:55","slug":"south-korea-elects-crypto-president-and-implements-travel-rule","status":"publish","type":"post","link":"https:\/\/www.sygna.io\/jp\/blog\/south-korea-elects-crypto-president-and-implements-travel-rule\/","title":{"rendered":"South Korea Elects Pro-Crypto President and Implements Travel Rule"},"content":{"rendered":"\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><em>In same month as crypto-conscious election, nation implements FATF\u2019s Crypto Travel Rule<\/em><\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h1 class=\"wp-block-heading\" id=\"introduction\">Introduction<\/h1>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>South Korea&#8217;s cryptocurrency sector is set for major regulatory changes following two major developments in the crypto-crazy East Asian country and years of hardship for exchanges. On March 9, South Korea elected a decidedly pro-crypto candidate in former prosecutor Yoon Suk-Yeol of the right-wing People Power Party. Just two weeks later on March 25, the nation implemented the <a href=\"https:\/\/www.sygna.io\/blog\/fatf-crypto-travel-rule-vs-aml-know-your-customer-kyc\/\">Financial Action Task Force\u2019s (FATF)<\/a> guidelines on the <a href=\"https:\/\/www.sygna.io\/blog\/fatf-travel-rule-implementation-and-vasp-crypto-regulation-2022\/\">Crypto Travel Rule<\/a>, following a year-long grace period for <a href=\"https:\/\/www.sygna.io\/blog\/what-is-fatf-recommendation-16-for-vasps\/\">virtual asset service providers (VASPs)<\/a> to catch up with the regulations. It\u2019s been an eventful month for the crypto community in the <a href=\"https:\/\/carnegieendowment.org\/2021\/08\/17\/korean-way-with-data-how-world-s-most-wired-country-is-forging-third-way-pub-85161\">world\u2019s most wired country<\/a>, and it\u2019s a good time to unpack some of what\u2019s been going on.<\/p>\n\n\n\n<p>In this article, we\u2019ll take a look at the state of crypto in South Korea, what Yoon promised during his campaign, and how the <a href=\"https:\/\/www.sygna.io\/blog\/fatf-travel-rule-solution-technology-lens\/\">Crypto Travel Rule<\/a> is being implemented in the country.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full\"><img decoding=\"async\" width=\"900\" height=\"550\" src=\"https:\/\/www.sygna.io\/wp-content\/uploads\/2022\/04\/alternate.jpg\" alt=\"\" class=\"wp-image-6910\" srcset=\"https:\/\/www.sygna.io\/wp-content\/uploads\/2022\/04\/alternate.jpg 900w, https:\/\/www.sygna.io\/wp-content\/uploads\/2022\/04\/alternate-600x367.jpg 600w, https:\/\/www.sygna.io\/wp-content\/uploads\/2022\/04\/alternate-768x469.jpg 768w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><figcaption>Source: Coinquill<\/figcaption><\/figure><\/div>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"crypto-background-south-korea\">Crypto Background: South Korea<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>South Koreans struggle with stagnating wages and rising levels of household debt, with homeownership largely out of reach for young people in major cities. This is steering many into stock and <a href=\"https:\/\/www.sygna.io\/blog\/sygnas-year-in-review-2021\/\">crypto<\/a> investments to get a leg up, despite a crypto crackdown by outgoing President Moon Jae-In of the Democratic Party, whose government oversaw regulations that shut down over 70 VASPs and left only a few standing. With over 5 million crypto accounts belonging to individuals in South Korea, venture capital firm Hashed estimates that around 10% of those who voted in the recent election hold some crypto, with young men said to have tipped Yoon\u2019s 1% margin of victory.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"south-korea-implements-fatf-s-crypto-travel-rule\">South Korea Implements FATF\u2019s Crypto Travel Rule<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Since March 25, South Korea\u2019s year-long grace period for implementing the Crypto Travel Rule has been over, and now the country\u2019s exchanges and crypto users are struggling to adjust to the <a href=\"https:\/\/forkast.news\/defi-nft-access-fatf-travel-rule-south-korea\/\">new reality<\/a>. With a threshold set at $821 \u2013 lower than <a href=\"https:\/\/www.sygna.io\/blog\/4-fatf-travel-rule-lenses-to-assess-aml-compliance-solutions-part-1\/\">FATF\u2019s<\/a> recommendation of $1,000 \u2013 larger transfers will be flagged and limited to user-verified wallets.<\/p>\n\n\n\n<p>South Korea\u2019s centralized exchange market has been drastically cut down to size in recent years, with only four significant players remaining. These include Upbit, Korbit, Bithumb, and Coinone. Upbit dominates the scene, with 78.3% of the market share.<\/p>\n\n\n\n<p>For allowing transfers under the new system, Upbit is using its Verify VASP program, while the other three exchanges collaborated on a new platform called the CODE system. The two systems allow for transfers to different <a href=\"https:\/\/www.sygna.io\/blog\/south-korea-act-legalizes-crypto-forces-vasp-fatf-travel-rule-compliance\/\">VASPs<\/a> and countries, while domestic transfers have been temporarily halted until April 8.<\/p>\n\n\n\n<p>Industry insiders in Korea, such as <a href=\"https:\/\/cointelegraph.com\/news\/korean-crypto-exchanges-are-now-in-compliance-with-the-travel-rule\">Hashed CEO Simon Kim<\/a>, are saying that the rollout of the Crypto Travel Rule has been pushed out overbearingly by regulators with \u201clow understanding,\u201d but he expressed confidence the necessary revisions would occur after the industry and users had to time to voice feedback.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"crypto-under-outgoing-president-moon-jae-in\">Crypto under Outgoing President Moon Jae-in<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Under the outgoing government, crypto has been pushed onto the ropes. A range of hard-hitting policies has chased a sizable portion of the industry out of the country, with many entities having relocated to <a href=\"https:\/\/www.sygna.io\/blog\/monetary-authority-of-singapore-gives-independent-reserve-in-principle-approval\/\">Singapore<\/a>&#8216;s greener pastures and more robust regulation. Here is a brief summary of South Korea\u2019s crypto crackdown in recent years:<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"capital-gains\">Capital Gains<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>In a <a href=\"https:\/\/www.coindesk.com\/policy\/2022\/03\/09\/conservative-candidate-yoon-suk-yeol-wins-south-koreas-presidential-election\/\">plan<\/a> that was meant to kick off this year but was delayed until 2023 due to investor backlash, the National Assembly has mandated a 20% capital gains tax on yearly crypto profits exceeding KRW 2.5 million ($2,024).&nbsp;<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"de-facto-ico-ban\">De Facto ICO Ban<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Due to a <a href=\"https:\/\/forkast.news\/crypto-bull-presidency-south-korea\/\">notice<\/a> posted on the website of a financial regulator in 2017, initial coin offerings (ICOs) have been in effect banned in Korea for the last five years. This is absent from any legislation, and it has fueled the flight of many crypto entities to Singapore.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"cross-trading-ban\">Cross-Trading Ban<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>In June 2021, the nation\u2019s Financial Services Commission forbade <a href=\"https:\/\/phemex.com\/academy\/what-is-crypto-cross-trade\">cross-trading<\/a> among crypto businesses.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"play-to-earn-ban\">Play-to-Earn Ban<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Despite widespread <a href=\"https:\/\/cryptonews.com\/news\/south-korean-gaming-firms-looking-emulate-axie-infinity-p2e-crypto-gaming-success.htm\">expressions of interest<\/a> from the domestic gaming industry, play-to-earn gaming is currently banned in South Korea.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"legislative-inaction\">Legislative Inaction<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>At the moment, there are <a href=\"https:\/\/cryptonews.com\/news\/how-south-koreas-next-president-might-change-crypto-economy-politics-east-asia.htm\">14 pieces<\/a> of crypto-related legislation stuck in the National Assembly.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"national-metaverse-project\">National Metaverse Project<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>One bright spot for crypto under the current administration was the announcement in February of $186.7 million in funds for the creation of a government-sponsored <a href=\"https:\/\/cointelegraph.com\/news\/south-korea-to-invest-187m-in-national-metaverse\">national metaverse project<\/a> called \u201cExpanded Virtual World.\u201d<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"crypto-promises-of-president-elect-yoon-suk-yeol\">Crypto Promises of President-Elect Yoon Suk-Yeol<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>President-elect Yoon offered a smorgasbord of crypto promises during the campaign, having competed against opponents who were also seeking to court crypto-savvy young voters. He went so far as to issue <a href=\"https:\/\/www.sygna.io\/blog\/nft-regulation-and-legislation\/\">non-fungible tokens (NFTs)<\/a> for his campaign, as did one of his rivals who even accepted crypto donations. How many proposals he will be able to get through the National Assembly, which is still controlled by his political opponents, remains to be seen.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"capital-gains\">Capital Gains<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>The incoming President has <a href=\"https:\/\/asia.nikkei.com\/Spotlight\/Cryptocurrencies\/South-Korea-s-incoming-president-vows-big-cryptocurrency-push\">pledged to raise<\/a> the threshold for capital gains tax for crypto to the same level as stocks, traditionally the favored asset class for Korean investors. That would mean that yearly crypto investment earnings under KRW 52.4 million ($42,450) would go untaxed.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"negative-regulation-and-crypto-unicorns\">Negative Regulation and Crypto Unicorns<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Yoon has pledged to eliminate \u201cunreasonable\u201d regulations that are \u201cfar from reality\u201d and stated he would pursue a framework of negative regulation, adding that legal infrastructure must be in place before taxes are levied. He has also said he would seek to lure and nurture crypto \u201cunicorns,\u201d meaning startups with a valuation of over $1 billion.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"illegal-assets-confiscation\">Illegal Assets Confiscation<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>The president-elect has promised to aggressively go after illicit funds obtained from hacks and to hand them over to the victims.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"basic-digital-assets-law\">Basic Digital Assets Law<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>During the campaign, Yoon floated the idea of a <a href=\"https:\/\/www.koreatimes.co.kr\/www\/biz\/2022\/03\/175_325347.html\">Basic Digital Assets Law<\/a>, which would mandate insurance policies that would cover funds lost due to hacks and system errors on exchanges.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"digital-industry-promotion-agency\">Digital Industry Promotion Agency<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Yoon said in the run-up to the election that he would create an agency for the promotion of digital industries, specifically with regard to crypto and <a href=\"https:\/\/www.sygna.io\/blog\/nft-regulation-and-legislation\/\">non-fungible tokens (NFTs)<\/a>, though this pledge did not make the ultimate list of his campaign promises.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"reversal-of-ico-ban\">Reversal of ICO Ban<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Under a Yoon administration, the current ban on ICOs will likely be reversed, as he has pledged to do so and the action would not require legislation to remove the current notice barring them.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"reversal-of-p2e-ban\">Reversal of P2E Ban<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Mentions of reversing the P2E ban made during the Yoon campaign were not to be found in the final versions of the campaign literature. Pressure may still mount to do away with the ban, as South Korean companies are lining up to get into the sector, and NFTs, often a key component of P2E, have unusually <a href=\"https:\/\/cointelegraph.com\/news\/why-nft-adoption-is-so-high-in-south-korea\">high adoption rates<\/a> in the country.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"the-verdict\">The Verdict<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>It\u2019s a heady time for crypto in Korea, with perhaps a bright and even pioneering future ahead. The country has long been a leader in many technological fields, and it had seemed uncharacteristic that it would push an emerging industry like crypto outside of its borders. With VASPs and other entities seeking to adjust to new regulations such as the Crypto Travel Rule, we at <a href=\"https:\/\/www.sygna.io\/gate\/\">Sygna<\/a>, with our offices on the ground in Korea, can assist with a range of institutional compliance solutions.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img decoding=\"async\" src=\"https:\/\/upload.wikimedia.org\/wikipedia\/commons\/thumb\/4\/43\/Seoul_Tower_View.jpg\/800px-Seoul_Tower_View.jpg\" alt=\"\"\/><figcaption>Source: Wikimedia Commons<\/figcaption><\/figure><\/div>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>South Korea is poised for regulatory reforms thanks to a crypto-friendly new president and the FATF Travel Rule&#8217;s implementation in March. <\/p>\n","protected":false},"author":20,"featured_media":6910,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[19,20,26,45,66,80],"tags":[100,101,102,113,114],"class_list":["post-6909","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-recommendation-16","category-fatf","category-news","category-asia-crypto-regulations","category-fatf-travel-rule","category-korea-crypto-regulations","tag-crypto","tag-travel-rule","tag-fatf","tag-korea","tag-yoon"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - 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