Worried About Buying Crypto in Korea? Here’s How to Avoid Disastrous Mistakes.
Buying digital money, or cryptocurrency, in South Korea is allowed, but the government watches it very closely to protect people. Think of it like a playground with strict safety rules. You can play, but you must follow the rules to keep everyone safe.
Since July 2024, the “Act on the Protection of Virtual Asset Users” has been in place. This law sets clear rules for crypto businesses and protects investors. Government bodies like the Financial Services Commission (FSC) and the Korea Financial Intelligence Unit (KoFIU) make sure everyone follows these rules, which include preventing illegal money activities.
How You Can Buy Crypto in South Korea
There are a few ways to buy digital currency in Korea. The method you choose depends on how much safety and control you want.
Centralized Exchanges (The Main Path)
This is the most common and regulated way to buy crypto in South Korea, especially if you are new to it. These platforms are like special online banks for digital money.
To use them, you must connect a Korean bank account that is in your real name. Each crypto exchange partners with a specific bank :
- Upbit works with K-Bank.
- Bithumb works with KB Kookmin Bank.
- Coinone works with Kakao Bank.
- Korbit works with Shinhan Bank.
Good points:
- They are regulated and follow government rules.
- The websites and apps are easy to use.
- They have strong security to protect your money.
Bad points:
- You must prove your identity with official documents.
- You must have a bank account with their specific partner bank.
Peer-to-Peer (P2P) Trading
P2P platforms let you buy crypto directly from another person. However, this method is becoming riskier. The government is increasing its watch over these kinds of trades to ensure they are not used for illegal purposes.
Good points:
- You might find better prices or have more payment choices.
Bad points:
- There is a higher risk of dealing with dishonest people.
- It offers less protection if something goes wrong.
Online Services with Credit or Debit Cards
Using a credit card to buy crypto is fast but comes with a big warning. The South Korean government has proposed rules to ban buying crypto with credit cards. This is to stop money from improperly leaving the country and to reduce risky buying behavior. While some international sites might still allow it, this method could be blocked at any time.
Good points:
- Transactions are usually very fast.
Bad points:
- Fees can be very high.
- This payment method is facing a potential ban by Korean regulators.
A Simple Guide to Buying Crypto on an Exchange
For the safest experience, using a regulated exchange is the best choice. Here is how you do it:
- Choose an Exchange Pick one of the main exchanges like Upbit, Bithumb, or Coinone. Make sure you can open an account at their partner bank.
- Open a Linked Bank Account You must open a bank account in your name at the bank partnered with your chosen exchange. For example, to use Upbit, you need a K-Bank account. This can be difficult for non-residents.
- Sign Up and Verify Your Identity Create an account on the exchange and complete the identity check, known as KYC (Know Your Customer). This involves providing your ID and linking your real-name bank account.
- Add Money to Your Account Deposit Korean Won (KRW) from your verified bank account into your exchange wallet.
- Buy Your Crypto Once the money is in your account, you can buy Bitcoin, Ethereum, or other available digital currencies.
Understanding Taxes on Crypto
Currently, you do not have to pay taxes on profits you make from crypto in South Korea. The government had a plan to start taxing crypto profits, but it has been delayed until at least 2027.
When the tax law does start, the plan is to apply a 20% tax on any yearly crypto profits over 2.5 million KRW (about $1,800) [user content]. This would include profits from selling, trading, or earning new coins from activities like staking. Because these rules are coming, it is smart to keep a careful record of all your crypto transactions.