Altcoins Talks - Cryptocurrency Forum
Learning & News => News related to Crypto => Topic started by: ABCbits on August 01, 2024, 11:49:58 AM
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Upbit, Bithumb, Coinone Face New Fees Under South Korea’s Revised Crypto Law
Highlights
- Upbit, bithumb, and other exchanges are set to pay a new fee under the revised South Korean crypto regulations.
- The fees total around $220,000 from four exchanges.
- Upbit is set to pay over 90% of the total fees levied on exchanges owing to the high market share it has captured.
After the implementation of the Virtual Asset User Protection Act in South Korea, crypto exchanges such as Upbit, Bithumb, and Coinone are now required to pay supervisory fees. These fees, estimated to total around 300 million won (approximately $220,000), are based on the operating revenue of these firms... Read more here (https://coingape.com/upbit-coinone-bithumb-face-new-fees-under-south-korea-crypto-law/).
At a glance, the fee isn't that high. But considering the fee is based on revenue (not profit), it would burden exchange which operate on losses. Your opinion is greatly appreciated.
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This is the first time I heard about supervision fees. I searched further and it seems this is the norm in other businesses too but I'm a bit confused as to why exchanges/business need to pay the supervision body to supervise their activity. What's the rationale? Some articles mention that this can be regarded as tax, but why would you name it differently? Sounds really odd if you're looking from the business POV.
Anyway, it seems like they will only request payment from an exchange that has more than 3 billion won of operating revenue, which probably means small exchanges won't be affected. Even if they operate on losses, those big exchanges probably will have enough funds to turn the situation around next year or so. If not, I guess that means the market decided they aren't good enough for them. CMIIW.
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This is the first time I heard about supervision fees. I searched further and it seems this is the norm in other businesses too but I'm a bit confused as to why exchanges/business need to pay the supervision body to supervise their activity. What's the rationale? Some articles mention that this can be regarded as tax, but why would you name it differently? Sounds really odd if you're looking from the business POV.
As far as I understand, it's a fee that this exchanges will have to pay to this supervisory bodies. So it's not free by any chance and so that could be the rationale behind it. Like when you apply for a business permit to operate, you have to pay certain fees for them to inspect the venue of your business before they can give you the green signal to operate.
But I do agree that it might be too much for exchanges that are not doing good right now and this fees could be a big burden for them, although it is calculated based on the operating revenue. But at least some leeway for small and mid tier exchanges might be good in the beginning.
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It is also new to me to know the term “supervisory tax,” I just don’t get a good feeling about it or anything. Maybe someone from Korea would talk more about this?
From my understanding, they are into cryptocurrency to profit. They probably saw a lot of money in the market.
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This is the first time I heard about supervision fees. I searched further and it seems this is the norm in other businesses too but I'm a bit confused as to why exchanges/business need to pay the supervision body to supervise their activity. What's the rationale? Some articles mention that this can be regarded as tax, but why would you name it differently? Sounds really odd if you're looking from the business POV.
As far as I understand, it's a fee that this exchanges will have to pay to this supervisory bodies. So it's not free by any chance and so that could be the rationale behind it. Like when you apply for a business permit to operate, you have to pay certain fees for them to inspect the venue of your business before they can give you the green signal to operate.
But I do agree that it might be too much for exchanges that are not doing good right now and this fees could be a big burden for them, although it is calculated based on the operating revenue. But at least some leeway for small and mid tier exchanges might be good in the beginning.
Good point on comparing it to business licenses/permits. I'm not familiar with their laws but if such fees are also treated as deductible expenses (in full) by the end of the taxable year, then I think it's all good. It's like paying your tax upfront
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As far as I understand, it's a fee that this exchanges will have to pay to this supervisory bodies. So it's not free by any chance and so that could be the rationale behind it. Like when you apply for a business permit to operate, you have to pay certain fees for them to inspect the venue of your business before they can give you the green signal to operate.
But I do agree that it might be too much for exchanges that are not doing good right now and this fees could be a big burden for them, although it is calculated based on the operating revenue. But at least some leeway for small and mid tier exchanges might be good in the beginning.
The South Korean government is tightening regulations on the crypto market. This is likely due to the past collapse of Terra and the recent rapid growth of Upbit, leading the South Korean government to become concerned about the risks in this market.
Increased oversight is probably necessary at this stage to ensure that the legitimate interests of investors and traders are protected in worst-case scenarios involving CEXs. Currently, we don't have the response of these CEXs, so we cannot assess the tax burden they are facing. If the South Korean crypto market continues to be active and develop, the revenue and profits of CEXs may still be able to fully cover these taxes.
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If the total fee is $220,000, it is not a problem for a platform that is making profits, and if the platform is not making profits, it is better to try to close it because at some point it may steal customers’ money or be hacked.
I thought the percentage would be 10% to 50% of clients’ funds, or that there would be a fund that would guarantee a certain percentage of deposits.
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At a glance, the fee isn't that high. But considering the fee is based on revenue (not profit), it would burden exchange which operate on losses. Your opinion is greatly appreciated.
Upbit has made good profit as well, the report (https://www.statista.com/statistics/1261765/south-korea-revenue-and-net-income-of-crypto-exchanges-by-company/)shows they are making good revenue so I think for them covering the fee won't be a big problem. But yeah who likes extra fee, this will be an extra burden on all exchanges especially for coin one because they are not making as much revenue as the other two are making.
Overall, this total fee is not going to be paid by only 1 exchange, think that three exchanges are paying it, and if these exchanges can't manage enough funds to pay the fee, then the customers should consider alternative exchanges which are tier 1 exchanges and have enough potential to pay more than 4 billion dollar fee.
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At a glance, the fee isn't that high. But considering the fee is based on revenue (not profit), it would burden exchange which operate on losses.
Well, since it is mandated by the law of South Korea, there is no escaping it and these exchanges must find ways to get back what are imposed to them maybe by higher fees to their users...otherwise if they can't take the heat then one day one or two will be leaving the market for lack of profits or on loss. This is going to be a big test on these platforms to still be profitable while the environment is getting stiff for them. There is really no choice becasue the government can impose anything it wanted to even to the point of choking the players in the industry. I am just saying, more good luck to Upbit, Bithumb, Coinone and some others competing in the expanding and upbeat market.
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At a glance, the fee isn't that high. But considering the fee is based on revenue (not profit), it would burden exchange which operate on losses.
Well, since it is mandated by the law of South Korea, there is no escaping it and these exchanges must find ways to get back what are imposed to them maybe by higher fees to their users...otherwise if they can't take the heat then one day one or two will be leaving the market for lack of profits or on loss. This is going to be a big test on these platforms to still be profitable while the environment is getting stiff for them. There is really no choice becasue the government can impose anything it wanted to even to the point of choking the players in the industry. I am just saying, more good luck to Upbit, Bithumb, Coinone and some others competing in the expanding and upbeat market.
I think it's base on profits, so not exchanges are going to pay that huge service fees, so with that, bigger exchanger will have to pay bigger fees and then the small ones will have to shell out small fees.
And it's a smart moved by South Korea as well I mean they will really need to follow the revised crypto law otherwise they can leave or stop operating. And it could also mean that those exchanges might comply with a stricter as far as the funds of it's customers too.
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I think it's base on profits, so not exchanges are going to pay that huge service fees, so with that, bigger exchanger will have to pay bigger fees and then the small ones will have to shell out small fees.
I don't know, but if such laws are based on profits, they will force large companies to not care about the Korean market as long as the government shares an increasing percentage of the profits with them, and medium and small platforms will not be affected.
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If the total fee is $220,000, it is not a problem for a platform that is making profits, and if the platform is not making profits, it is better to try to close it because at some point it may steal customers’ money or be hacked.
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That's harsh, but i agree with your statement when we're talking about platform or exchange which has been around for some time.
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Overall, this total fee is not going to be paid by only 1 exchange, think that three exchanges are paying it, and if these exchanges can't manage enough funds to pay the fee, then the customers should consider alternative exchanges which are tier 1 exchanges and have enough potential to pay more than 4 billion dollar fee.
That's correct. The full news shows estimated fee for each exchange based on known revenue and then sum it to about $220K.