South Korean lawmakers ended a long political battle on September 30 and launched measures by the ruling party to delay the enactment of a controversial crypto tax law.
At a meeting on the 26th, which was announced just yesterday, Finance Minister Hong Namke and key Democratic lawmakers from the National Assembly, a South Korean parliamentarian, reached a final agreement that the crypto tax will be implemented as planned.
Korean cryptocurrency will tax cryptocurrencies in the same way as traditional stocks. This will require a 20% tax on income generated from cryptocurrencies over 2.5 million KRW, or approximately $2,100 USD.
Most of the Democratic Party members in the National Assembly have tried to pass an amendment to the tax law that would delay taxes until 2023. Democratic Rep. Kim Byung-ok, at an open meeting on September 15, proposed introducing a capital gains tax. With a similar stock tax in 2023 instead of 2022.
While the ruling majority party should theoretically have enough votes to pass the change, it has faced strong opposition from Finance Minister Hong, who wields considerable power and has held many leadership positions in the country, including that of prime minister.
Minister Hong has repeatedly stated throughout 2021 that the tax will go into effect as originally planned, going so far as to say that a crypto tax is imminent in 2022.
At least twice since May, Minister Hong has reiterated his firm stance against the ruling Democratic Party that the cryptocurrency will go into effect without delay.
While this is Hong’s gain, some industry insiders are concerned that the new tax will affect trade volumes and the overall interest in the industry.
But Jun Hyuk Ahn, a Korean cryptocurrency analyst, believes that there is no reason to worry about a drop in interest rates. He told Cointelegraph:
“I don’t think taxes will hold back the cryptocurrency market in Korea. We’ve seen what happened in the US and things will be different here.”
The new legislation complements the new cybersecurity regulations that have recently prompted several Korean exchanges to leave the market. Only 29 crypto exchanges met the September 24 deadline.
Of the 29, only four have partnerships with real bank accounts in local banks, which gives them the legal right to continue offering winning trading pairs. Four are Upbit, Bithumb, Coinone, and Korbit. The remaining 25 exchanges are ISMS (Internet Security Management System) certified and will offer trading pairs from crypto to crypto.
About it: Bybit crypto exchange suspends services in South Korea
Starting today, Upbit will require all users trading over 1 million won ($842) to complete a KYC, and all users trading all amounts will also be required to complete this by October 8th. The new KYC process is designed to increase engagement. Exchange operations according to money laundering procedures.
Korean exchanges such as Upbit previously used a bank account in their real name and messaging app Kakaotalk as the actual KYC mechanisms. Bithumb, Coinone, and Korbit are expected to follow Upbit and require additional KYC from users.