Yoon Suk-yeol, South Korea’s new president, promised his supporters that he would create a series of crypto-friendly policies.
Yoon won the elections in March and took office this month. He said that he would increase the tax threshold for cryptocurrency investment profits to 50 million won or around $38,900.
Resistance from NARS
However, he is encountering some opposition.
South Korea’s National Assembly Research Service (NARS) classifies cryptocurrency as a virtual asset. It offers information and research on legislative and policy matters to parliamentarians. And according to NARS’ notification recently published, the tax threshold for revenue earned through virtual assets should only be 2.5 million won or around $1,940, with a 20% tax rate.
This recommended barrier is far lower than South Korea’s new president desires.
NARS’ notification also stated that the tax rate is at the same level as income from financial investments. Therefore the asset class is “not highly taxed.”
The new tax regulations will go into force in 2023. And a new regulatory agency will exist for digital assets.
In December of 2020, the law implemented the country’s asset income tax system. Yoon also pledged support for initial coin offerings, outlawed in 2017.
“Most crypto-active nation”
According to news reports, Jisu Park, CEO of Seoul-based smart contract auditing and infrastructure firm Sooho.io, implied that South Korea’s new president “is warming up to the function of cryptocurrencies as an investment asset.”
South Korea is one of the most crypto-active nations in the world. According to research by the country’s top financial regulator, the market increased to 55.2 trillion won ($45.9 billion) by the end of 2021, with about 5.58 million users, or around 10% of the country’s population.
South Korea’s cryptocurrency sector is flourishing but is not open due to legislative constraints.
Five main local exchanges dominate the market: Upbit, Bithumb, Coinone, Korbit, and Gopax. Foreign and smaller companies, on the other hand, have a more difficult time complying with the government’s demand to collaborate with domestic commercial banks.
The final decision of South Korea’s president Yoon Suk-yeol will determine the fate of crypto investments and trading in the country from here on out.