South Korea’s right-wing political party, People Power Party, has introduced a proposal to delay the taxation of cryptocurrency gains by three years. If approved, the tax on crypto gains, initially set to begin in 2025, would be postponed until 2028.
The bill, proposed on July 12, 2024, and available on the South Korean National Assembly’s website, argues that imposing an income tax on cryptocurrencies, perceived as higher-risk assets compared to stocks, would further dampen the already negative investor sentiment.
“Most investors are expected to leave the market if the country imposes an income tax on an asset that has higher risks than stocks,”
the bill’s description stated.
Initially, a 20% tax on crypto gains was scheduled to take effect on January 1, 2022, but it has been delayed twice due to significant backlash from investors and industry experts.
The right-wing People Power Party, which includes current President Yoon Suk-yeol, had promised to push back the crypto gains tax during the last general election.
According to local news reports, South Korea’s Ministry of Economy and Finance has yet to decide to delay the tax further. The ministry plans to announce new amendments to the tax code at the end of this month.
South Korea is fast becoming home to one of the world’s largest cryptocurrency markets as it gears up to introduce comprehensive regulation for the industry. As of the end of last year, approximately 6.5 million citizens, or 12.5% of the population, were using cryptocurrencies, according to the Financial Services Commission. In the first quarter of 2024, the Korean won was the most-used fiat currency for crypto trading, surpassing the U.S. dollar, according to data from Kaiko.
As part of the preparation for the rules, the country’s regulators are intensifying their scrutiny of domestic crypto exchanges to combat questionable trading practices. The Financial Supervisory Commission (FSC), the nation’s top financial regulator, announced a set of guidelines on June 25 aimed at enhancing user security in case of exchange bankruptcies. The guidelines will take effect on July 19 alongside the country’s new crypto regulatory framework.
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