Crypto Now Safer in South Korea Thanks to This New Foundation

• South Korea’s FSC approves foundation to safeguard users’ assets from failed crypto exchanges.
• The new foundation will manage deposits via banks and return crypto from defunct exchanges.
• Ten out of 22 South Korean crypto exchanges have shut down, with three temporarily paused.

South Korea’s Financial Services Commission (FSC) has given the green light to a foundation designed to protect users’ crypto assets. The Digital Asset Protection Foundation will safeguard assets in the event of cryptocurrency exchange failures.

This move comes after several exchanges in the country closed, raising concerns about the security of user deposits. The foundation is one part of a broader effort to ensure the return of assets to users from defunct exchanges.

The foundation will operate under the Digital Asset eXchange Alliance (DAXA), a consultative group of South Korean crypto exchanges. It will focus on protecting assets held in crypto exchanges that fail. User deposits will be managed by banks, while cryptocurrencies will be handled by fiat-to-crypto exchanges. This structure will provide increased oversight and security for users.

Ten of South Korea’s 22 crypto exchanges have already shut down. Three more have temporarily stopped operations. The FSC recognizes that returning user assets from closed exchanges can be a lengthy process. Difficulties in contacting operators or users missing claim deadlines have made things more complicated. The new foundation will address these issues by directly handling the return of funds.

Read also: South Korea’s FSS Initiates On-Site Inspections of Crypto Exchanges

Crypto Taxation Not Until 2028

Despite the new asset protection measures, South Korea has postponed taxes on crypto gains until 2028. The government originally planned to introduce a 20% tax on profits over 2.5 million won ($1,875) by January 2023. This deadline was pushed back first to 2025 and now to 2028.

Read also: Bithumb’s Bank Switch Under Review by South Korean Regulator

The FSC attributes the delay in taxation to the need for a thorough regulatory framework. The government wants to stabilize the market and ensure security before taxing profits. There are concerns that implementing taxes too soon could disrupt the market.

The Digital Asset eXchange Association has pushed for stronger protections for users. The creation of the new foundation is considered a positive step in addressing concerns around the safety of virtual assets. It gives users more confidence that their funds will be returned, even if an exchange collapses.