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- South Korea’s exclusion of cryptocurrencies in donation laws contrasts with global trends, potentially limiting charitable innovation.
- Amended donation legislation reflects South Korea’s push to modernize, embracing stablecoins and blockchain vouchers.
- Balancing crypto inclusion with regulatory scrutiny, South Korea aims to curb financial crimes while potentially stifling charitable crypto giving.
South Korea has decided to exclude cryptocurrencies from its amended donation legislation, a move that could impact the country’s charities and donation drives. The Ministry of Public Administration announced that the updated “Donations Act” will allow various new donation methods, such as department store gift vouchers, stocks, and loyalty points from Korean internet giant Naver, but it will not permit the use of crypto assets like Bitcoin.
The decision comes as a surprise, especially considering the growing popularity of cryptocurrencies in South Korea. Globally, over $2 billion has been donated using cryptocurrency as of January 2024, according to reports. However, South Korean charities will not be able to tap into this market due to the exclusion of digital assets from the amended law.
Despite the exclusion of cryptocurrencies, the amended legislation will permit donations in local government-issued, KRW-pegged stablecoins and blockchain-issued gift vouchers. This move aims to modernize the donation process, which was first enacted in 2006 when there were fewer types of payment methods and smartphones were not as prevalent.
The amendments also expand the methods of donation from traditional bank transfers and online methods to include automated response systems, postal services, and logistics services. The Ministry aims to implement these changes starting in July, pending approval from lawmakers.
While South Korea was against taking such a step, it is reported that more than 50% of American charities now accept donations in digital assets, which clearly shows an increased trust in cryptocurrencies in charity. The fact that the cryptocurrencies are not being encompassed by the South Korean donation laws may keep the country’s charities off the blockchain bandwagon.
South Korea is also making efforts to combat cryptocurrency-related crimes and financial fraud. To combat the rise in crypto-related crimes, the government recently announced intentions to elevate its interim crypto crime investigation unit to the status of an official agency.
Furthermore, Crypto.com, a Singapore-based crypto exchange, is encountering regulatory challenges in joining the South Korean market. South Korean officials discovered anti-money laundering (AML) issues in the exchange’s data, prompting an “emergency on-site inspection” to monitor its operations.
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