It has been confirmed that a new cryptocurrency exchange developer recently obtained a venture certification when Ministry of SMEs and Startups (MSS) cancelled venture certifications of all major cryptocurrency exchanges last year. Popular exchanges that are generally well known are applied with regulations while exchanges that are not much popular are free of regulations.
After searching Venture In, a blockchain company that set up a new cryptocurrency exchange earlier this year received a certification as a new venture company in February.
This company that issues cryptocurrency that is listed at some major exchanges established its own exchange earlier this year. Although this exchange is located in Africa, most of its management team is a South Korean. It was also confirmed that this company hired blockchain-related developers while having an office in South Korea.
R&D company is a type of a venture company that is confirmed by Korea Technology Finance Corporation and Small & Medium Business Corporation. A company will be certified as a venture company if it receives at least 65 points.
A company that is certified will receive various tax benefits such as 50% tax deduction in corporation tax and income tax, 75% tax deduction in acquisition tax, and 50% tax deduction in property tax.
MSS revised ‘an enforcement ordinance of Venture Special Act related to promotion of venture company’ and removed ‘blockchain-related cryptocurrency dealer and agency’ from a list of venture companies. It listed illegal acts such as money laundering and hacking and speculation frenzy related to cryptocurrency trades as reasons why it removed blockchain-related companies from the list.
Out of five blockchain companies that already had certifications before this enforcement ordinance came out in December, Dunamu (Upbit), Streami (Gopax), Wave String (Coinis), and Ripple4You saw their certifications cancelled.
It is heard that MSS looked into foreign cryptocurrency price sites and reports from media one by one to check whether or not a venture company has a cryptocurrency exchange. This indicates that MSS had to manually look for companies with cryptocurrency exchanges.
At the moment, it is systematically impossible for MSS to prevent such case like this when a blockchain company set up a new cryptocurrency exchange. It is difficult for MSS to remove such case if a company intentionally hides the type of its business and does not make information of its business public.
Even if a company operates cryptocurrency exchange, it is able to maintain its certification if its sales from fees and commission are low while other sales are high as MSS distinguishes a company based on its main business with highest percentage of sales. Although Coinplug maintains its cryptocurrency exchange, it is able to maintain its qualification as a venture company since its sales from development of blockchain systems are high.
“If a company registers itself as a venture company by hiding the type of its business, it is difficult for us to check in advance whether this company is included in the list of companies that are removed as venture companies.” said a representative for MSS. “We will cancel a certification whenever we find out that a company lied about the type of its business through periodic monitoring.”
Staff Reporter Park, Jungeun | jepark@etnews.com