South Korea to put crypto taxation move on hold

TL;DR Breakdown:

• South Korea’s president elect proposing to extend cryptocurrency tax law by another year

• The move is in keeping with his earlier campaign promises

• Crypto market participants are expecting better regulatory clarity from the incoming government 

Crypto taxation has been a topic of discussion among different countries. This time, South Korea’s government seems to be in the middle of making a crucial decision, as the country’s president reveals plans to hit the ground running with concessions for regulation of the crypto industry. There is a proposed bill to start taxing crypto capital gains in the country by January 2023. But according to reports, President-elect Yoon Seok-yeol is considering post-poning the date till 2024. 

Cryptocurrency tax break extension being considered by South Korea

South Korean news outlet, Hankook Ilbo, reported that the Presidential Transition Committee of Seok-yoel is pushing for the extension to enable the incoming administration put in place some complementary crypto taxation laws for. Last year, the country’s Deputy Prime Minister and Finance Minister Hong Nam-ki, also made a similar move by delaying the adjustment of its crypto taxation policy. This came shortly after it was revealed that the country was going to implement a crypto taxation policy on crypto income.

This is a similar reason for the current government cited for the initial postponement of the taxation plans to 2023, although some analysts noted that the move was to gain votes. The new presidents move is not surprising to observers. During his campaign, Seok-yoel promised to make crypto a large part of his government and transform the country into a global crypto hub. 

His campaign promises include allowing all Initial Coin Offerings (ICO) to take place in the country. Similarly, he promised to impose crypto friendly laws in the country. South Korean crypto industry participants have welcomed Seok-yoel’s election as a boon for the industry. The secretary-general of Korea Blockchain Association, Yoon Seong-han said the candidates stance on crypto is highly appreciated as it would positively impact the industry. 

“As ICOs are banned now, we have no choice but to issue coins in Singapore and other countries. Ventures and startups will be able to raise money easily from investors [if the ban is lifted],” he noted. 

South Korea’s previous crypto regulations

While the government has put in place many regulations for the crypto industry, many of them have been frowned up by market participants. Towards the end of last year, crypto exchanges in Korea felt the brunt of the unfriendly regulations as many of them were forced to shutdown. 

The tax law that the incoming government plans to postpone has also been receiving criticism. Crypto investors have decried the fact that the law when implemented will include crypto taxation for gains made from crypto trading above around $2,000. The outcry is exaggerated by a corresponding law for stocks that will tax gains from around $40,0000