South Korea Sidelines Crypto in Donation Law Modernization

South Korea recently updated its Donation Act for the first time in nearly two decades, aiming to modernize the charitable giving landscape. However, the revisions excluded cryptocurrencies as a permissible donation method, a surprising move considering the country's booming crypto industry and high adoption rate.

The legislation, enacted in 2006, predated the rise of cryptocurrencies and digital payment methods. The revision reflects an effort to streamline the donation process for the digital age. While crypto donations are off the table for now, the amended law paves the way for donations using government-issued stablecoins pegged to the Korean Won and blockchain-based gift certificates.

This decision by South Korean lawmakers stands in contrast to a global trend of charities embracing crypto donations. The Giving Block, a platform facilitating charitable crypto donations, estimates that over $2 billion has been donated globally using cryptocurrency as of January 2024. By excluding cryptocurrencies, South Korean charities are missing out on this potential funding source.

The rationale behind excluding crypto from the permissible donation methods remains unclear. South Korea has a well-established crypto market, and regulators have taken steps in recent years to implement stricter oversight. The lack of clarity surrounding the reasoning for this exclusion has led some to speculate that policymakers are cautious about the volatility associated with certain cryptocurrencies and the potential for money laundering.

Despite the exclusion of cryptocurrencies, the revised Donation Act represents a positive step towards modernizing charitable giving in South Korea. The inclusion of stablecoins and blockchain-voucher systems demonstrates a willingness to embrace new technologies. However, the question of when and how cryptocurrencies will be integrated into the donation landscape remains unanswered.

Moving forward, it will be interesting to see how South Korea navigates the balance between fostering innovation in charitable giving and mitigating potential risks associated with cryptocurrencies. The approach adopted by South Korean regulators could influence how other countries with established crypto markets address the issue of cryptocurrency donations in the future.

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