6、South Korean Crypto Venture Capital

Lecca Ventures

Lecca Ventures is a South Korean venture capital firm focused on the Web3 and cryptocurrency sectors. They specialize in investing in community-driven startups, particularly those led by visionary founders. Lecca Ventures takes a hands-on approach, providing not only capital but also actively participating in the development and expansion of their portfolio companies. Their investment strategy emphasizes quality over quantity, aiming to support startups that offer unique and innovative solutions in the Web3 space. Their portfolio includes companies like Airstack, Alloyx, Nibiru, Shield, Anima, and Mission ate Cash, known for their contributions to the crypto industry.

Hashed

Hashed is a renowned blockchain investment firm and incubator based in Seoul, with offices in Silicon Valley. The company focuses on supporting and investing in innovative blockchain projects and Web3 startups. Founded by Simon Kim, Hashed is dedicated to building a decentralized future by supporting visionary entrepreneurs and providing comprehensive support to its portfolio companies. Hashed plays a significant role in the global blockchain ecosystem, hosting events like Korea Blockchain Week to promote community and collaboration within the industry.

South Korean Crypto Market Regulation

South Korea has established a comprehensive regulatory framework for cryptocurrencies, aiming to ensure investor protection and market integrity. Key components of this framework include:

Digital Assets Basic Act

This upcoming legislation aims to provide a structured approach to regulating virtual assets. It includes regulatory requirements for virtual asset service providers (VASPs), standards for issuing and listing cryptocurrencies, and information disclosure requirements to prevent unfair trading practices.

Anti-Money Laundering (AML) and Compliance

The Financial Intelligence Unit (FIU) is enhancing its scrutiny of cryptocurrency exchanges. The FIU's strategy includes rigorous inspections and enforcement of strict regulatory standards to curb illegal activities such as money laundering and embezzlement. Exchanges must obtain real-name verification services and segregate user funds from company funds.

Investor Protection Measures

Following high-profile incidents like the Terra-LUNA collapse, regulatory focus has shifted towards strengthening investor protection. This includes stricter controls on token issuance and listing, as well as mandatory disclosure of holdings by senior officials to prevent conflicts of interest.

Global Compliance Standards

South Korea's regulatory efforts align with global standards, such as those set by the Financial Action Task Force (FATF). This ensures that the country's regulations are consistent with international best practices, enhancing the reliability and security of its digital asset market. These measures aim to create a safer, more transparent environment for cryptocurrency trading in South Korea, balancing the need for innovation with the necessity of protecting investors and maintaining market stability.

8、South Korean Tax Policies

South Korea's tax policies on cryptocurrencies are evolving, reflecting the government's efforts to balance regulation and market growth. Initially, South Korea planned to impose a 20% tax on cryptocurrency gains exceeding 2.5 million KRW (approximately USD 2,300) starting in 2022. However, this faced several delays due to industry opposition and legislative changes. As of now, the tax implementation has been postponed to January 2025, applicable to cryptocurrency trading income, requiring investors to report their gains for taxation. Additionally, the ruling People Power Party has proposed another delay, prioritizing the establishment of a comprehensive regulatory framework, possibly pushing the effective date to 2027.

Tax regulations classify cryptocurrency gains as "miscellaneous income," and any non-sale transfer of crypto assets, such as gifts or inheritances, is subject to statutory gift and inheritance tax rates, which can be as high as 50%. The South Korean government also focuses on increasing transparency and combating illegal activities in the crypto market, requiring exchanges to share transaction records and senior officials to disclose their cryptocurrency holdings starting in 2024.

In South Korea, capital gains tax varies based on the asset type and whether the seller is a resident or non-resident. Non-residents must pay capital gains tax on income from Korean sources, with rates and rules typically similar to those for residents.

9. Conclusion

As a G20 member with a strong economy backed by companies like Samsung and Hyundai, South Korea plays a significant role in the global economic landscape. It is also a culturally homogeneous market, making it challenging for teams without a local presence to enter the market. South Korea's financial system enjoys high trust, which leads to lower enthusiasm for decentralized self-custody and DeFi among users. 

However, driven by FOMO (Fear of Missing Out) for investment, value preservation, and wealth creation, the South Korean crypto market remains robust and stands out in the global crypto landscape, especially with the extensive adoption of licensed cryptocurrency exchanges and users.

As of 2024, South Korea's cryptocurrency market is characterized by a rapidly evolving regulatory environment, increased government oversight, and significant market activity. With high levels of market participation and stringent enforcement measures, South Korea has become a key player in the global cryptocurrency field. As the industry continues to develop, South Korea is poised to play an increasingly important role in the global crypto market.

Note: All of the above opinions are not investment advice. If there are any inappropriate points, please feel free to leave a message to correct them.

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