#NasdaqETFUpdate South Korea's crypto policy is designed to balance innovation with consumer protection and regulatory oversight. Here are the key aspects:

*Regulatory Framework*

- The Financial Services Commission (FSC) is the primary regulator for cryptocurrencies, overseeing Virtual Asset Service Providers (VASPs) and ensuring compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations.

- The Act on Reporting and Use of Specific Financial Information requires VASPs to report suspicious transactions and maintain records.

*Key Regulations*

- *Licensing Requirements*: VASPs must obtain a license from the FSC to operate in South Korea, ensuring they meet strict standards and ongoing reporting requirements.

- *Real-Name Verification*: Cryptocurrency exchanges must verify customers' identities using real-name verification.

- *AML/KYC Compliance*: VASPs must implement AML/KYC procedures, conduct customer due diligence, and monitor transactions.

- *Travel Rule*: VASPs must share information about transactions exceeding approximately $820, including sender and recipient details.

*Taxation*

- *Capital Gains Tax*: Cryptocurrency gains are subject to a 20% tax for individuals and 22% for corporations.

- *Value-Added Tax (VAT)*: Cryptocurrencies used for payment may be subject to VAT, currently at 10%.

- *Taxation Threshold*: A 20% tax will be imposed on crypto gains above $2,100 per year.

*Future Developments*

- The Digital Asset Basic Act (DABA) aims to provide a comprehensive regulatory framework for digital assets, defining regulatory guidelines and potentially permitting security token offerings.

- South Korea plans to institutionalize the crypto sector by 2024, with ongoing efforts to refine regulations and enhance consumer protection.¹ ²