Challenges Faced by South Korean Universities with Crypto Donations
South Korean universities encounter difficulties in utilizing donated cryptocurrencies effectively due to strict financial regulations. Despite receiving substantial crypto donations, these institutions struggle to convert these assets into cash, limiting their ability to make the best use of them.
Financial Authorities’ Stance on Crypto Donations to Universities
- Local media report multiple South Korean virtual asset businesses donating self-issued cryptocurrencies to universities.
- However, financial authorities have imposed restrictions preventing universities from opening corporate accounts necessary for crypto transactions.
Concerns Raised by Financial Authorities
- An official from the Korean Financial Intelligence Unit (KOFIU) under the Financial Services Commission (FSC) stated that universities are unlikely to receive approval to open corporate accounts for crypto transactions.
- This decision comes after university requests to convert significant crypto donations into cash.
Obstacles in Converting Cryptocurrencies into Cash
- Universities require a real-name account at a virtual asset exchange to convert donated cryptocurrencies into Korean won.
- Local financial authorities have instructed banks not to issue such accounts to domestic corporations and institutions due to concerns regarding money laundering risks.
Restrictions on Corporate Accounts for Crypto Transactions
- While the Act on Reporting and Using Specified Financial Transaction Information does not explicitly prohibit corporate accounts, financial authorities have restricted them to certain government agencies for public interest purposes.
- This decision aims to mitigate the high risk of money laundering associated with corporate accounts.
Cautious Approach to Crypto Donations
- Financial authorities and the Ministry of Education plan to advise universities against accepting crypto donations in the future.
- They are considering exceptions for converting previously received donations into cash under specific conditions to help universities manage crypto donations effectively.
Recent Developments in South Korea’s Donation Act
- A revision of the Donation Act expanded the types of assets citizens can donate to charities, but cryptocurrencies like Bitcoin remain excluded from the donation scope.
- South Korea’s growing interest in digital assets has not yet led to the inclusion of cryptocurrencies in donation regulations.
Increase in South Korea’s Crypto User Base
- According to a recent KOFIU report, South Korea’s crypto user base grew by 390,000 in 2023, reaching a total of 6.45 million users.
- The average daily trading volume in the country also increased by 24% compared to the first half of the year, indicating a rising interest in cryptocurrencies.
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