South Korea is one of the four Asian tigers. This clearly indicates that the country has a high level of economic and technological development, as well as very favorable conditions for doing business. Fintech is considered to be a particularly promising and dynamically developing area. Therefore, if you were planning to register a company in South Korea to carry out activities related to digital assets, our blog post may be useful to you. Today we will look at the features of the cryptoasset trade regulation in South Korea.
Fiat currency transactions
To comply with the law, it is necessary to open a bank account in Korea to exchange fiat currencies and cryptoassets. For two years now, there has been a regulatory requirement that clients of crypto exchanges only use a bank account with a "real name". Moreover, it must be opened in the same bank that is used by the corresponding crypto-exchange. This is supposed to assist banks and companies registered in Korea to implement KYC procedures and ensure that AML requirements are met.
If you intend to establish a crypto exchange in South Korea, then you should be pleased with the fact that investors can trade crypto assets in this jurisdiction without restrictions.
NOTE: Minor residents and foreign citizens are prohibited from opening accounts for exchanging crypto assets. Most Korean cryptoexchanges have taken measures to prevent such individuals from accessing their platforms. However, this prohibition has no legal effect.
Cryptoassets as securities
Cryptoassets broker-dealers in South Korea are not regulated provided that cryptoassets are not securities (security tokens). Things are quite different in this case and registration requirements will apply to such companies.
There are many types of blockchain-based digital assets nowadays, from cryptocurrencies to security tokens and collectible tokens. Some of these assets are strictly controlled by the regulator, which is why crypto exchanges need to register, as they will provide customers with the opportunity to trade any known types of crypto assets.
NOTE: Foreigners who intend to start a crypto business in South Korea are motivated by the fact that foreign cryptoasset exchanges are generally not subject to any Korean laws and regulations. However, local investment laws apply to transactions that take place overseas and affect Korea and the Korean securities market.
The Korean authorities are taking steps towards tokenizing the existing types of securities. The stated goal of this process is to achieve unprecedented benefits for the entire crypto market and to ensure the democratization of access to capital markets for various companies and investors, to reduce costs for all trade participants and create the necessary transparency of all processes.
Thanks to the blockchain, the regulator will be able to track all transactions, and smart contracts can determine the identity of the buyer, the time of the transaction, the scheme of income distribution or dividend payments. This increases the transparency of transactions.
One can use both regular money and cryptocurrencies to buy tokens. The absence of infrastructural barriers and costs gives the poor and non-professional traders opportunities previously available only to institutional investors.
If you are planning to start a crypto activity in Asia, it should be borne in mind that in Korea, legal entities are taxed for the increase in cryptoassets or profits from the sale of cryptoassets during the fiscal year. At the same time, individuals are in a more advantageous position, since for them the profit from the sale of crypto assets is not taxable income. You can find out more information on the topic of today's article by signing up for a consultation on registering a cryptoexchange in South Korea. To contact the specialists of IQ Decision UK, fill out the short form below.