South Korean crypto exchanges are feeling anxious about the possibility of a commission fee cap being imposed on them in the near future. The concerns stem from recent statements made by Lee Jae-myung, the frontrunner in South Korea’s presidential race. According to reports from the South Korean newspaper Noksek Gyungjae Shinmun, crypto exchanges are worried that Lee’s promise to “lower crypto transaction fees” could lead to decreased profits for their platforms.
Lee made this pledge along with a commitment to approve Bitcoin spot ETFs, in response to competing promises from his main rival, Kim Moon-soon of the People Power Party. Kim had previously announced plans to allow the country’s sovereign wealth and state pension funds to invest in BTC and other tokens. The upcoming election on June 3 has put the spotlight on these crypto-related policy proposals.
Despite Kim’s promises, Lee maintains a significant lead in the polls, causing concern among crypto exchanges about the potential financial impact if he were to win the presidency. Reports indicate that the entire crypto industry is expressing apprehension about Lee’s proposed fee reduction plan.
An anonymous exchange official expressed worries about the already low commission fees on domestic platforms compared to international exchanges. They emphasized that further reductions could significantly impact the profitability of exchanges, particularly smaller operators. Another senior executive from a non-fiat trading South Korean crypto exchange echoed these sentiments, highlighting the sector’s existing regulatory challenges.
Lee is reportedly evaluating a plan to cut crypto transaction fees to align them with those of the domestic stock market. The media outlet noted that South Korean exchanges currently charge an average of 0.05% in commission fees, while Lee’s proposal would cap fees at 0.015%, representing a reduction of approximately 70%.
Advocates of Lee’s policy argue that it aims to safeguard crypto investors, enhance transparency, and boost transaction volumes. However, industry insiders point out that South Korean exchanges face limitations in diversifying their profit structures due to tight regulations. Unlike overseas exchanges that offer services like crypto derivatives and margin trading, domestic platforms are constrained in expanding their revenue streams.
In light of these challenges, crypto exchange officials are calling for policymakers to engage in dialogue with the industry and consider the market’s unique characteristics. The uncertainty surrounding the potential commission fee cap looms large for South Korean crypto exchanges, raising concerns about the future financial sustainability of the sector.