South Korea has recently updated its donation legislation, excluding digital currencies, potentially impacting the nation's charities and fundraising initiatives. According to a report by Kyunghyang Shinmun on May 5, the Ministry of Public Administration revealed that the amended "Donations Act" will continue to prohibit the use of cryptocurrencies like Bitcoin for donations, even as new permissible donation methods such as department store gift vouchers, stocks, and loyalty points from Korean internet giant Naver are introduced starting in July.
Initially established in 2006, the Donations Act was created when fewer payment options existed, and smartphones were not yet commonplace. The legislation has evolved to include various modern donation methods beyond traditional bank transfers, incorporating automated response systems, postal, and logistics services.
Despite the increasing popularity of digital assets in South Korea, the Ministry has not provided an explanation for their exclusion from donation methods. However, the revised legislation will allow donations in locally issued, KRW-pegged stablecoins and blockchain-issued gift vouchers.
This regulatory decision arrives amidst the growing global adoption of cryptocurrencies for charitable contributions. TheGivingBlock notes that over $2 billion has been donated in cryptocurrency worldwide as of January 2024, a market now inaccessible to South Korean charities.
Additionally, more than half of American charities have begun accepting digital asset donations, showcasing a stark contrast in regulatory approaches across different regions.
This update is part of broader regulatory efforts in South Korea, which include plans to transform its temporary crypto crime investigative unit into a permanent department to address the rising issues of crypto-related crimes and financial fraud.
Simultaneously, Crypto.com, a Singapore-based cryptocurrency exchange, faces challenges entering the South Korean market due to regulatory barriers, further highlighted by recent Anti-Money Laundering (AML) concerns and emergency inspections by South Korean authorities.
SOURCE: South Korea stops short of allowing crypto in updated donation laws