South Korea's recently revised donation legislation has stirred controversy by excluding digital currencies, potentially impacting charitable giving within the country. According to a report by local media outlet Kyunghyang Shimbun on May 5, the Ministry of Administration disclosed that partial amendments to South Korea’s Donation Act have been proposed, introducing new restrictions on the use of cryptocurrencies for donations.
Beginning in July, individuals seeking to contribute to charitable causes will have an array of alternative methods available, including department store gift certificates, stocks, and loyalty points from South Korean internet giant Naver. Notably absent from the list of accepted donation methods, however, are digital assets like Bitcoin (BTC).
The legislation, initially enacted in 2006, predates the widespread adoption of smartphones and the proliferation of various payment methods. While the scope of acceptable donation methods has evolved over time to include diverse options such as bank transfers, online platforms, automated response systems, and postal services, the exclusion of digital asset donations has raised eyebrows given their popularity in South Korea.
Despite the popularity of digital asset donations within the country, the Ministry did not provide a specific rationale for their exclusion. However, the legislation does permit donations in locally issued won-pegged stablecoins and blockchain-based gift certificates.
The decision to exclude digital currencies from the revised donation legislation may have significant implications, especially considering the substantial global donations made using cryptocurrencies, estimated to surpass $2 billion as of January 2024. This move places local charities in South Korea at a disadvantage compared to their counterparts abroad, as more than half of U.S. charities reportedly accept digital asset donations.
In light of regulatory challenges, Singapore-based cryptocurrency exchange Crypto.com has been navigating hurdles to enter the South Korean market. In April, South Korean authorities conducted an emergency on-site inspection of the exchange after discovering anti-money laundering-related issues in its submitted data, highlighting the ongoing efforts to regulate the cryptocurrency sector in the country.
