Conglomerates extending ties with crypto exchanges on deregulation, growth potential

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By Lee Min-hyung

Korean conglomerates are extending ties with cryptocurrency exchange operators on growing hopes that the incoming administration will ease regulations in the digital asset market.

Crypto players have so far been crying foul over what they call discriminative regulatory hurdles imposed by the incumbent government, including the tight imposition of income tax on crypto traders. The government planned to levy tax on those whose gains from crypto trading exceed 2.5 million won ($2,040), taking 20 percent of the amount in excess of the 2.5 million won as income tax from 2022.

The plan, however, failed to come into effect as scheduled, amid widening controversy that the tax is not fair at a time when stock investors are subject to tax only when their revenue tops 50 million won.

Expectations are growing that the planned tax system and a series of other regulation-ridden policies will be revised in a more market-friendly manner after President-elect Yoon Suk-yeol takes office in May.

In response, more and more non-crypto industry players are on track to seek business opportunities in the nascent yet profitable growth area.

Bithumb said Monday it has attracted investments worth 9 billion won from a group of conglomerates here for a strategic alliance in their joint project. Under the partnership, Bithumb Meta, a metaverse-focused subsidiary of the crypto exchange, will join hands with LG CNS, CJ OliveNetworks and Dreamus to build an advanced metaverse platform.

The LG affiliate will take on a role as a tech partner by helping Bithumb Meta build a more secure non-fungible token (NFT) marketplace. Aside from the partnership, the investment arm of SK Group is also scheduled to issue its own cryptocurrency sometime in the third quarter of 2022, as part of its group-wide efforts to increase investments in the blockchain technology whose growth potential remains high, according to the company.

The CJ subsidiary will also team up with Bithumb Meta in developing NFTs.

Dreamus, which is a subsidiary of SK Square, will serve as a content partner by engaging in development of fandom content that will be available through Bithumb's metaverse platform.

“We are going to expand partnerships with companies here and abroad for sustainable growth of the ecosystem,” Bithumb Meta CEO Cho Hyun-sik said.

Card companies are also expanding ties with crypto exchange operators. BC Card, a payment services provider, has recently signed a partnership with Dunamu, the operator of Korea's largest crypto exchange Upbit, in issuing the so-called Dunamu BC Card.

When users purchase items in real life with the card, the items will be available as NFTs in Dunamu's metaverse platform, 2nd Block.

“As most conglomerates and their key subsidiaries pay close attention to the global rise of NFTs and the metaverse, more companies will seek partnerships with exchanges here after the new administration grips power and eases unnecessary regulations,” an industry official said.