South Korean crypto exchanges are “worried” they may be hit with a commission fee cap following recent comments from Lee Jae-myung, the frontrunner in the nation’s presidential race.
Per the South Korean newspaper Noksek Gyungjae Shinmun, crypto exchanges think Lee’s promise to “lower crypto transaction fees” could result in lower profits for their platforms.
South Korean Crypto Exchanges: Commission Fee Fears
Lee made the pledge this week, along with a promise to green-light Bitcoin spot ETFs. He appears to have been responding to a slew of crypto-related manifesto promises from his main rival, the People Power Party’s Kim Moon-soon.
Kim, earlier this month, promised to let the country’s sovereign wealth and state pension funds buy BTC and other tokens. South Korea goes to the ballot booth on June 3.
Lee Jae-myung, the frontrunner in the South Korean presidential elections, on the campaign trail earlier this week. (Source: MBN News/Screenshot)However, Lee leads Kim by around 20 percentage points in most opinion polls. And exchanges fear that if he wins power in early June, they could be hit in the pocket.
The media outlet wrote that the entire crypto industry was now “expressing concerns” about Lee’s “fee reduction plan.”
One exchange official, speaking on condition of anonymity, told the newspaper: “Domestic crypto exchange fees commission fees are already very low compared to overseas platforms. Additional reductions could have a significant impact on exchanges’ profitability.”
A senior executive at a non-fiat trading South Korean crypto exchange spoke to Cryptonews.com on May 7. Also speaking on condition of anonymity, the executive said:
“Exchanges are already over-regulated as things stand in this country. A commission fee cap will hurt everyone in the sector more, particularly smaller operators.”
Lee, meanwhile, is reportedly “reviewing a plan” that involves cutting crypto transaction fees in order “to establish parity with domestic stock market transactions.”
South Korean Fees ‘Are Already Lower Than Those of International Rivals’
The media outlet said that, per its calculations, South Korean crypto exchanges charge an average of 0.05% in commission fees.
Lee’s plan would see fees capped at 0.015%, a reduction of around 70%. The media outlet wrote that Binance commission fees stand at 0.1%, although it offers a 25% discount (0.075%) for transactions involving its own coins.
The United States-based Coinbase trading platform, meanwhile, charges a fee of 0.5% for transactions worth less than $10,000.
Advocates of Lee’s policy say that the move is part of a wider effort to protect crypto investors. They also say it will increase transparency and boost transaction volumes.
S Korean Exchanges Face Other Limiting Factors, Claim Industry Insiders
South Korean industry insiders also complained that domestic exchanges experience limitations when it comes to diversifying their profit structures.
While many overseas exchanges can offer profit-generating services such as crypto derivatives and margin trading, domestic platforms are restricted by tight regulations.
As such, any sort of transaction fee cap would hurt South Korean crypto exchanges’ main revenue flow. This could prove to be “a huge burden,” crypto exchange officials claimed.
Insiders called on politicians to hold “consultation sessions with the industry” and “consider the market’s unique characteristics.”
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