South Korean Crypto Exchanges Brace for 70% Fee Cut

South Korean crypto exchanges are expressing concerns over potential commission fee caps following recent statements from Lee Jae-myung, the frontrunner in the nation’s presidential race. Lee has pledged to “lower crypto transaction fees,” which has sparked worries among exchanges about the impact on their profitability. This pledge was made in response to similar promises from his main rival, Kim Moon-soon, who proposed allowing the country’s sovereign wealth and state pension funds to invest in Bitcoin and other tokens.

Lee’s proposal to reduce transaction fees is part of a broader effort to align crypto transaction costs with those of the domestic stock market. According to industry insiders, South Korean crypto exchanges already charge relatively low commission fees compared to international platforms. The average commission fee in South Korea is around 0.05%, while Lee’s plan aims to cap these fees at 0.015%, a reduction of approximately 70%. This move is seen as a way to protect crypto investors and increase transparency, but it has raised concerns about the financial viability of smaller exchanges.

One exchange official, speaking anonymously, highlighted that the current commission fees are already very low compared to overseas platforms. The official expressed that additional reductions could significantly impact the profitability of exchanges, particularly smaller operators. A senior executive from a non-fiat trading South Korean crypto exchange echoed these sentiments, stating that exchanges are already over-regulated and that a commission fee cap would further burden the sector.

Industry insiders also pointed out that South Korean exchanges face limitations in diversifying their revenue streams due to tight regulations. Unlike many overseas exchanges that offer profit-generating services such as crypto derivatives and margin trading, domestic platforms are restricted by regulatory constraints. This makes transaction fees a crucial revenue source, and any cap on these fees could prove to be a significant burden.

In response to these concerns, industry insiders have called for politicians to engage in consultation sessions with the industry and consider the unique characteristics of the market. They argue that a balanced approach is necessary to ensure the sustainability of the crypto industry while protecting investors. The outcome of the presidential election on June 3 will be closely watched by the crypto community, as it could significantly impact the regulatory landscape and profitability of crypto exchanges in South Korea.