Regulation
South Korea Just Delayed 20% Tax on Cryptocurrency Profits – DL News
- The People Power Party wants to postpone the introduction of a new tax on cryptocurrencies until 2028.
- Investors fear cryptocurrency taxes could deal a blow to a fragile market.
- The Korean won facilitated $456 billion in cryptocurrency trading in the first quarter.
Lawmakers from South Korea’s ruling People’s Power Party have proposed delaying the implementation of a 20% tax on cryptocurrency trading profits until 2028.
THE proposalsubmitted last week, comes amid concerns that a quick imposition of taxes could scare Korean investors away from a cryptocurrency market already buffeted by negative sentiment.
The proposed tax rules would force investors to pay a hefty tax on annual gains exceeding 2.5 million won (about $1,800).
In contrast, capital gains tax on stock transactions in South Korea only applies to profits above 50 million won (about $36,000). This difference has drawn heavy criticism from the crypto community.
Debate on tax policy
After soaring 65% in the first quarter, Bitcoin has fallen 9% since March 31 in a market buffeted by macroeconomic forces and supply peaks.
The debate over this tax policy has caused numerous delays since its planned introduction in 2021.
As part of its election campaign earlier this year, the centre-right People’s Power Party pledged to delay the implementation of the tax by two years.
This is part of their broader strategy to support the digital asset market while establishing a comprehensive regulatory framework.
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Despite its relatively small population of just under 52 million, South Korea wields considerable influence in the global cryptocurrency market.
In the first quarter of this year, the Korean won facilitated $456 billion in cryptocurrency trading volume, exceeding the $455 billion exchanged in US dollars.
The proposed tax deferral is part of a broader package of regulatory measures aimed at limiting potential excesses and ensuring market stability.
VASP law
South Korea will roll out its Virtual Asset User Protection Act this week. The law requires virtual asset service providers (VASPs) to segregate user deposits and virtual assets from their own holdings, while introducing measures to combat unfair business practices.
The government is also laying the groundwork for a comprehensive digital asset framework, designed to impose increased oversight on the virtual asset services industry.
Callan Quinn is DL News Asia Correspondent based in Hong Kong. Contact me at callan@dlnews.com.