Crypto Industry Protests Korea’s Plan to Exclude It from Startup Classification

The Korean cryptocurrency and blockchain groups have voiced concerns about a latest central government plan to exclude virtual coin companies from the classification list of ventures and startups that allows them to claim a tax cut up for 100%, local media reported on Thursday.

The Korea Blockchain Association, the Korea Blockchain Industry Promotion Association and the Korea Blockchain Startup Association issued a joint declaration saying that they are against the latest proposal of the country Ministry of SMEs (small and medium enterprises) and startups as the recommendation will put the industry on the same level as the specially regulated sectors.

“The measure will discourage the industry as a whole…Blockchain-based virtual currency trading will soon get treated just like gambling and alcohol businesses,” the associations said in the joint press release as quoted by the Korean Times newspaper.

Earlier this week, the ministry proposed a tax amendment that will exclude business related with cryptocurrency trading and brokering from the venture and start list. One of the leading blockchain companies, FANTOM Foundation, called on the government to use the South Korea’s advantages that will attract cryptocurrency investments from around the world instead of putting pressure on the industry.

"Korea can be an ideal incubator to promote cryptocurrency and blockchain-related industries. High-speed internet infrastructure is already here, unparalleled to any other country in the world. And the Korean people are very adoptive of technology,” Alex Park, marketing manager of FANTOM Foundation said. “Now it is the government's role to establish a favorable environment for virtual coins and their blockchains. However, if the government imposes more regulations instead of helping them, firms will move their bases abroad to find a better business environment."

South Korea’s central authorities give mixed signals to the crypto and blockchain industry. One the one hand, last year the Financial Services Commission (FSC) imposed a ban on the virtual currency crowdfunding model of the Initial Coin Offerings (ICOs) although lawmakers are currently working on a reverse measure. On the other hand, this July the government officially recognized the crypto industry.