South Korea remains resolute in its position on the utilization of cryptocurrencies for charitable contributions within the nation.
The authorities have opted to eliminate the use of virtual assets for benevolent purposes in a suggested modification of the "Donations Act."
According to a local news media outlet, Kyunghyang Shinmun, on May 5th, the Ministry of the Interior and Safety reviewed and amended the act to broaden the scope of acceptable donations. However, this does not include digital assets like Bitcoin (BTC).
"The updated law welcomes donations in local government-issued, KRW-pegged stablecoins and blockchain-based gift vouchers," shared a spokesperson from the Ministry.
Proposed Amendments Exclude Cryptocurrencies
The original Donations Act was established in 2006, predating the widespread use of smartphones and the introduction of various payment methods.
With the rise of cryptocurrencies since their inception in 2009, the outdated rules no longer cover the multitude of payment options available in today's market.
Consequently, the Ministry revisited the Donations Act, proposing new measures in January 2024 that specifically exclude digital assets despite the high crypto market in South Korea.
However, the updated law welcomes donations in local government-issued, KRW-pegged stablecoins and blockchain-based gift vouchers. It also supports traditional bank transfers and online payments.
The report indicates that the proposed regulations include automated response systems, postal services, and logistics services.
Should the proposed law be approved by the State Council following a legislative notice by June 10, it will become effective in July.
“We plan to proceed with procedures to ensure that the enforcement ordinance is passed before the end of July, and it will be implemented immediately after passage,” said a spokesperson from the country’s Ministry of Public Administration and Security.
South Korea to Accept Gift Cards for Donations
Starting in July, individuals looking to contribute to charitable causes will have various alternative methods, including department store gift vouchers, stocks, and loyalty points from Korean internet giant Naver.
The amended law also outlines specific purposes for collecting donations, including supporting children, adolescents, and people with disabilities, promoting employment, addressing low birth rates, aging populations, and rural decline, revitalizing local communities, and other public interest purposes.
Additionally, the legislation designates the second Monday of December yearly as “Donation Day,” allowing national and local governments to organize commemorative events and reward donors.
Meanwhile, the exclusion of cryptocurrencies from accepted payments for charity donations in South Korea contrasts with the global trend of increasing digital asset donations.
According to TheGivingBlock, more than $2 billion has been donated using virtual assets as of January 2024.
It has been reported that over 50% of charitable organizations based in the United States now accept donations in digital assets.
Additionally, South Korea revealed its plan to upgrade its temporary crypto-crime investigative unit to an official department in late April, aiming to tackle the increasing number of crypto-related financial frauds and crimes.
Setback for South Korea Charity Organisation
The news of South Korea's refusal to accept crypto donations will disappoint crypto investors and impact South Korean charities.
Despite recent attempts by charities to launch crypto-powered donation drives, they have faced legal obstacles due to South Korean law prohibiting charities from accepting crypto donations. Past campaigns have heavily relied on domestic exchanges for aid.
In a January 2024 article for Bokji Times, Jang Yoon-Ju, a researcher for The Beautiful Foundation – one of South Korea’s biggest charities – documented the challenges charities face regarding crypto-related donations. She highlighted that potential donors often inquire about cryptocurrency donations, posing difficulties in response.
Despite various attempts to launch crypto-powered donation platforms in the past, notably in 2014 and 2018, these efforts ultimately failed.
It wasn't until 2020 that crypto donations gained momentum, with four large domestic charitable organizations encouraging the public to donate their tokens. However, charities have had to collaborate with crypto exchanges to convert coins to cash, which is then passed on to the organizations.
The Increasing Trend of Crypto Donations in South Korea
Despite the regulatory hurdles, crypto donations for non-profit organizations are gaining traction in South Korea, with many individuals opting to donate their coins to overseas charities.
South Koreans have generously donated BTC 14 to support charities that aid victims of the Turkey-Syria earthquakes in 2023.
These donations were made possible through a platform operated by Dunamu, the company behind the leading Upbit exchange in South Korea.
Moreover, last year, around 902 South Korean individuals also contributed "digital assets" worth approximately $118,000 to support charities that assist refugees affected by the war in Ukraine.
The Ukrainian government also established a direct crypto donation platform for international donors, further highlighting the growing popularity of crypto donations in South Korea.