The cryptocurrency environment continues to evolve at a rapid rate, and there’s no exception to that in South Korea. With the new Virtual Asset User Protection Act (VAUPA) coming into effect in July 2024, it’s more important than ever to be well-informed about the legalities, trends and best practices for trading digital assets.Β
Legalities and regulations
South Korea took significant steps to regulate the cryptocurrency market with the introduction of VAUPA, which aims to protect investors and ensure market transparency.
This law requires cryptocurrency exchanges to register with the Financial Services Commission (FSC) and adhere to strict anti-money laundering (AML) and know-your-customer (KYC) regulations. You should therefore ensure that any exchange you use is registered with the FSC to guarantee your funds’ safety and comply with the law.Β
While cryptocurrencies are not considered legal tender in South Korea, the government is actively working on a taxation framework for transactions involving them. For example, a 20% levy on crypto gains was initially expected to be implemented in 2022, but this has now been delayed until at least 2027.
You can stay up to date on any new regulations that may affect you by checking official announcements from the Ministry of Economy and Finance.Β
Popular cryptocurrencyΒ
Bitcoin remains a popular choice among Korean investors, but there’s a strong preference for altcoins, such as:
- XRP (Ripple): Due to its suitability for cross-border payments, the XRP token has seen a huge surge in South Korea with the daily trading volume reaching $6.3 billion.Β
- Dogecoin (DOGE): The low entry price and potential for quick returns have made DOGE attractive to many retail investors.
- XLM (Stellar): Relationships with financial institutions like Bank of Korea and Bank Busan have helped XLM gain traction.
Wormhole (W), Beam (BEAM) and Solana (SOL) have also seen increases in popularity recently.
Getting started
When you’ve decided you want to start crypto trading, it’s a good idea to acquire a digital wallet to store your assets securely. Choose a reputable provider that offers robust security features and supports the cryptocurrencies you wish to trade.
Once you have a wallet and have chosen an exchange, you can begin the registration process. This will typically involve verifying your identity in compliance with KYC regulations. After completing the verification, you can link your bank account to deposit funds and start trading.
Remember to start with small investments and gradually increase your exposure as you gain more experience.
