Some have argued that lawmakers should postpone taxing crypto because the bill still has many loopholes to work on, but on top of that, the presidential election is fast approaching and lawmakers from all parties have intent on winning over young voters, who have shown high rejection of the crypto tax and even formally asked to delay it.
With rising unemployment rates and a slowing economy, South Korean interest in crypto has only increased. It had even been alleged that a The South Korean decline in Bitcoin investments could have an impact on its price.
South Korean lawmakers can’t decide on crypto
Lawmakers are on the wrong track when crypto-taxation takes effect. There had been a previous proposal to postpone until 2023 which was dropped last September because Deputy Prime Minister and Minister of Finance Hong Nam-ki said the tax was to come into effect next year:
Any further delay in the already postponed execution will lead to a loss of public confidence in government policy and undermine the stability of the legal system,
At the time, there was a huge backlash from crypto investors through protests and online petitions calling on regulators to drop the bill. One of them collected around 201,079 signatures in 25 days.
Protesters claimed the taxation was premature because crypto investors had no protective measures, and the proposal means they would be taxed at higher rates than equity investors. As the tax is scheduled to be imposed on income from virtual assets over 2.5 million won ($ 2,125), the taxation of capital gains on shares begins at 50 million won ($ 42,016 ). Some experts have called for gains from virtual assets to be reclassified as financial income.
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Even before the bill was announced, in 2018, the South Korean government declared the crypto movement in the country to be ‘irrational’ and started threatening to ban all cryptocurrencies and shut down exchanges. .
In March 2020, South Korea adopted an amendment that entered into force in March 2021, the Law on the Reporting and Use of Specific Financial Transaction Information. It focuses on crypto exchanges, custodian wallet providers, ICO projects, global service providers involved in the sale or purchase of crypto, crypto to crypto exchanges, crypto transfer, storage or management of virtual assets.
All of these service providers must register with Korea’s financial regulators before getting involved in any business and rethinking their KYC and anti-money laundering systems.
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