Binance Holdings Ltd., the world's No. 1 virtual asset exchange, acquired Korea exchange GOPAX, but investments by Korea corporations in overseas virtual asset companies have been blocked for nine years. Not only mergers and acquisitions, but even remitting funds to overseas virtual asset companies is blocked. The virtual asset industry says "Korea corporations are being discriminated against in reverse."
According to the financial sector on the 14th, the Financial Services Commission plans to soon announce "guidelines on virtual currency transactions by listed companies." Once the guidelines are issued, it is expected that domestic corporations will be able to open accounts at domestic exchanges to trade virtual assets.
By contrast, investments in which domestic corporations purchase equity in overseas virtual asset exchanges or issuers are blocked. An industry official said, "When Korea corporations try to invest in overseas virtual asset companies and attempt to remit dollars, they are blocked by the banks," and noted, "The policy from nine years ago that remitting dollars to overseas virtual assets cannot be allowed due to high risks of capital outflow and money laundering is still in effect."
Investments in virtual assets by domestic corporations were banned when the Moon Jae-in administration announced an emergency package in 2017. At the time, there were no clear regulations on virtual assets, and some virtual asset exchanges exploited this to issue accounts even to minors. The Moon administration banned corporate investment in virtual assets, judging that if corporations invested and prices crashed, it could harm soundness.
Foreign exchange authorities also do not allow overseas investments in virtual assets, saying that in a situation where virtual assets have no legal entity, there are risks of capital outflow and money laundering.
The path is open for foreign capital to invest in domestic virtual asset businesses. Binance Holdings Ltd. bought 67% equity in GOPAX in Feb. 2023. The virtual asset industry says the government's regulations are still stuck in the past. Lee Jeong-yeop, an attorney and representative of Lawjipsa who previously served as president of the Blockchain Law Association, said, "Government policies that have been shelved for nearly 10 years are still restricting industrial growth. For the virtual asset industry to grow, the emergency measures created in 2017 must end and perceptions must change." Lee Jeong-su, a professor at Seoul National University School of Law, also said, "While failing to show flexibility between systems and reality, Korea's virtual asset market is falling behind the global trend."
The United States, Europe and Japan allow not only virtual asset transactions by domestic corporations but also overseas investments. Japan's SBI Holdings began by investing equity in Bitstamp, a Luxembourg exchange, in 2018, and now also holds equity in Ripple (XRP), the coin with the fifth-largest market cap. U.S.-based Galaxy Digital is also continuing equity investments in virtual asset projects around the world.