Korean Regulators Eye Staking Services, Reports Say

Financial regulators in South Korea will study staking services on local bitcoin exchanges, according to News 1.

According to the publication, the regulators’ interest was sparked by recent enforcement actions by the U.S. Securities and Exchange Commission (SEC) against the relevant Kraken exchange platform.

A News 1 official who spoke to us confirmed that the regulators’ attention relates to “events abroad.” However, he noted that Korean exchanges “did not participate in actions that could be construed as asset management for profit.”

A sector research group in South Korea drew attention to two points that guided the SEC:

• The staking service was deemed an unregistered securities offering by the U.S. regulator;
• The pooling of staking into a common pool promised higher returns than individual operations.

Experts noted that, despite the similarities between staking and earning interest on a bank deposit, there is a key difference. In fact, a crypto user provides it to perform transaction validation, which cannot be considered passive income.

“Just as grain is the product of a farmer’s labour, the reward for staking is the product of transaction verification,” emphasized the expert.

Industry professionals note that the majority of leading crypto trading platforms in Korea have settled with regulators on staking services as part of the implementation of the Special Financial Transactions Act.

But analysts concede that the SEC-Kraken case could prompt a shift in the stance of local regulators.

In August 2022, South Korea’s Ministry of Strategy and Finance ruled that tokens earned by residents from airdrops, hard forks, and staking rewards are taxable.