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| Virtual coin investors watch a display board at the Bithumb crypto exchange in Seoul. / Yonhap |
By Jhoo Dong-chan
The government's decision to exclude the nation's crypto exchanges from its classification list of venture firms is provoking an industry outcry.
Blockchain industry lobby groups, including the Korea Blockchain Association, Korea Blockchain Industry Promotion Association and Korea Blockchain Startup Association, expressed their concerns about the government's decision.
"The measure will discourage the industry as a whole," they said in their joint press release.
The statement came in response to a revised bill released by the Ministry of SMEs and Startups excluding businesses trading or brokering cryptocurrencies from the list of ministry-designed ventures and startups.
The list excludes only a few types of businesses such as public amusement and drinking establishments as well as gambling businesses.
"Blockchain-based virtual currency trading will soon get treated just like gambling and alcohol businesses," the lobby groups said in the press release.
"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."
Following the announcement, the price of the world's most widely used virtual coin bitcoin dropped 7.3 percent to $6,018.5 Tuesday from the day before, according to investing.com. It then recovered about 4 percent to $6,294 as of 2:30 p.m. Wednesday.
"It will be a huge loss if the government excludes the blockchain industry from its economic policy," said Alex Park, marketing manager of blockchain firm FANTOM Foundation.
"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. 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."
Contrary to the ministry's stance, the Financial Services Commission (FSC) said last month it will establish a department exclusively for policymaking initiatives in the nation's blockchain industry.
As part of its restructuring plan to lead financial innovation in the coming Fourth Industrial Revolution era, the FSC has decided to establish the Financial Innovation Bureau. The decision was made during the top financial regulator's cabinet meeting with the Ministry of the Interior and Safety.
