Latest South Korea’s Crypto Regulation Overhaul: Implications for the Gaming Industry in Cryptocurrency

Bitcoin South Korea is setting the stage for a transformative shift in cryptocurrency regulation, a move poised to impact the gaming industry along with broader financial sectors. As the government prioritizes stricter controls and transparency, crypto gaming platforms in particular are likely to feel the effects. From a safer investment environment to potential operational hurdles, South Korea’s new rules could mark a turning point for the integration of blockchain in gaming. Phase Two of Crypto Regulation: Balancing Growth and Investor Protection On September 20, 2024, South Korea’s Financial Services Commission (FSC) announced the second phase of its cryptocurrency regulation plan, focusing on expanding the virtual asset market while boosting investor protections. A key component of this phase requires companies in the virtual assets sector to operate through real-name accounts, a move aimed at reducing anonymity and increasing transparency. For gaming platforms that use cryptocurrencies, this new rule could signal both opportunities and challenges. According to Ji-Soo Kim from Outlook iGaming, the use of cryptocurrencies in online gaming has surged thanks to advantages like enhanced privacy, faster transactions, and lower fees compared to traditional payment methods. As Kim highlights, “This surge is driven by the benefits cryptocurrencies offer,” making them attractive to gamers and gaming companies alike (source: https://www.smartcampaign.org/ ). This growth is part of a broader trend that could see the global blockchain gaming market reach $165.4 billion by 2030, with a projected compound annual growth rate of 51.7% from 2024 to 2030. The FSC also announced plans to review the Capital Market Act, aiming to foster fair competition between traditional and virtual financial markets. This regulatory review may open new doors for crypto gaming platforms to integrate more seamlessly with traditional financial systems, potentially leading to increased adoption and more innovative gaming experiences. Increased Oversight to Combat Irregularities Beyond the FSC’s initiatives, the Financial Supervisory Service (FSS) is also stepping up its scrutiny of cryptocurrency exchanges involved in irregular activities. Investigations are planned for two major Korean won-based exchanges and several other digital asset platforms, with the goal of curbing risks related to fraud and other illicit practices. For the gaming industry, this heightened oversight could be a mixed blessing. On the positive side, increased regulation may help remove bad actors from the market, creating a safer environment for players and legitimate crypto gaming projects. However, the more stringent regulations may also slow innovation, especially for new and smaller entrants facing high compliance costs. The recent enactment of the Virtual Asset User Protection Act emphasizes the government’s commitment to tackling fraud within the sector. By implementing this framework, South Korea is reinforcing protections for virtual asset users, which could, in turn, build confidence in crypto gaming platforms and make blockchain-based games more appealing to a broader audience. Cross-Border Crypto Regulation: The Impact on Global Gaming Operations Perhaps the most impactful regulatory change was announced by Finance Minister Choi Sang-Mok at a G20 meeting in Washington. According to Minister Choi, South Korea intends to implement regulations on cross-border cryptocurrency transactions by 2025.  » …

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Carla Contass

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