South Korea: new president faces resistance to crypto-friendly reforms

Photo - South Korea: new president faces resistance to crypto-friendly reforms
Yoon Suk-yeol, who won the March presidential election, has encountered difficulties in realizing his campaign promises. In particular, he announced the implementation of crypto-friendly reforms and the raising of the tax threshold for income from investments in digital currencies. However, within the framework of the current legislation, it is impossible to implement the plan.
The newly elected president planned to raise the specified tax threshold to 50 million South Korean won (38.9 thousand dollars). But the National Assembly Research Service of the Republic of Korea (NARS) classifies digital currencies as virtual assets, for which the following conditions apply: the tax threshold on income received from them is 2.5 million won (1.9 thousand dollars) at a tax rate of 20%. NARS representatives argue that the tax rules are the same for cryptocurrencies and traditional financial investments. At the same time, the announcement of the current low taxes contravenes Yoon Suk-yeol’s election campaign. According to the new president’s plans, the changed tax rules will come into force in 2023. A new state body responsible for regulating digital assets will also be created, and the possibility of holding a previously banned ICO is being considered. Such actions on the part of the state indicate a serious attitude towards cryptocurrencies as investment assets. South Korea is one of the most crypto-active countries in the world. According to official data, in 2021, the digital currency market showed strong growth: its volume reached 55.2 trillion South Korean won (45.9 billion dollars). More than 5 million residents became holders of digital assets, which corresponds to almost 10% of the country’s total population.