Crypto exchanges and blockchain startups in South Korea are protesting against a recent legislative proposal by the government to exclude the industry from recognized venture businesses.
In a proposal outlined by South Korea’s Ministry of SMEs and Startups this week, the government body revealed its intention to exclude the blockchain industry, including cryptocurrency exchanges, from the government’s official classification list of venture firms through a revision to the existing law.
If the proposal is legislated, cryptocurrency startups and brokerages would join a handful of other businesses in the exclusions list, pitting them alongside the bar, gambling and entertainment industry rather than being recognized as startups or SMEs.
The proposal has led to a significant outcry from the collective blockchain industry, the Korea Times reports, with a number of lobby groups including the Korea Blockchain Association, Korea Blockchain Industry Promotion Association and Korea Blockchain Startup Association expressing their concerns vehemently against the proposal.
“The measure will discourage the industry as a whole,” the lobby groups said in a press release.
Significantly, startups and companies in the industry will no longer be able to avail tax perks if they are excluded from the list of classified venture firms if the proposal turns into law.
The lobby groups added in their joint statement:
“If the revision is legislated in the National Assembly, a number of blockchain firms won’t be eligible for various tax benefits. It will discourage their investment and R&D. They will eventually move their base to foreign countries.”
The restrictive policy against the blockchain sector comes despite the domestic government’s own pledge to budget over 1 trillion won ($885 million) for the development of select technologies including blockchain in 2019 alone.
Open for feedback until early September, the proposal comes at a time when South Korean lawmakers hasten to regulate the cryptocurrency and ICO sector domestically. In a comprehensive guideline ruling earlier this year, regulators moved to ban anonymous cryptocurrency trading through exchanges in the country. Authorities mandated a real-name trading system wherein a trader’s accounts at the crypto exchange and the connected bank from where fiat funds are pulled or withdrawn to, have the same matching name.
Meanwhile, some 400 kilometers south of Seoul off the coast of the Korean Peninsula, Jeju Island is looking to looking beyond all the fuss by attempting to open its shores to the blockchain industry. In a proposal to the central government, Jeju Island – the main island of the self-governing Jeju province – governor Won Hee-ryong outlined a plan to become “a special zone for blockchain and cryptocurrency” while confirming his intention to allow startups to hold initial coin offerings (ICOs) in the island for fundraising despite the ongoing mainland ban.
National Assembly Seoul image from Shutterstock.
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