South Korean blockchain industry hits out at government
South Korea’s blockchain industry has objected to the government’s proposals to group cryptocurrency exchanges with casinos.
The government wants to remove crypto exchanges’ current status as SMEs and instead put them in the same category as entertainment and gambling businesses.
If enacted into law, the measures would mean less favourable tax treatment for South Korean crypto exchanges.
On Tuesday, various local blockchain associations submitted a letter to the government in protest at the moves, claiming they risked stifling technological innovation.
“If this legislation is implemented, domestic companies with the second largest number of blockchain technology patents after IBM will be excluded from classification as venture businesses just because they operate a cryptocurrency exchange,” said a joint letter from the Korea Blockchain Association, Korea Blockchain Industry Promotion Association and Korea Blockchain Startup Association.
The letter goes on to warn that local investment in blockchain technology could be discouraged with firms in the sector choosing to relocate overseas.
As part of its overall aims to reduce speculation in cryptocurrencies, earlier this year the South Korean government said exchanges should only offer services to Korean residents and use an identity verification process.
In September last year, South Korea’s financial regulator moved to ban the nation’s firms from participating in ICOs following similar measures in China.
The government also outlawed the trading of cryptocurrencies on margin amid fears that South Korean citizens were taking unreasonable risks.