South Korea Delays New Crypto Tax Rules
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The latest move comes as a result of pressure from crypto exchanges. They asked for more time to implement the required changes and start new infrastructure that will allow them to stick to the laws. The new tax structure was announced in July earlier this year and implements a 20% tax on gains over 2.5 million won per year.
Crypto traders weren’t happy about it, but the government didn’t back down.
Three-Month Delay
After a lot of pressure from crypto exchanges, the South Korean government delayed the new law on crypto tax rules for three months. That’ll be enough time for crypto exchanges to implement new tax infrastructure and obey the law when it comes into effect.
According to the new law, cryptocurrency gains of over 2.50 won which is just under $2,500 will be taxed at 20%. Income lower than this amount will not be taxed.
As soon as the new tax measure was announced, the Korean Blockchain Association criticized the decision. Since there was no way it would be overturned, a delay was requested until at least January 2023. The South Korean government didn’t accept the proposal at first, but has now given crypto exchanges three extra months to prepare for the new tax law.
The legislative amendments from March this year could lead to a massive restructure of crypto trading in South Korea. It’s a step that will lead to official crypto legality recognition in the Asian country and a deep restructuring of the entire Korean crypto industry. More specifically, it will radically change the cryptocurrency exchange infrastructure.
While legalization of crypto trading is great, it comes at a steep price.
Strict Requirements
The new law will officially recognize cryptocurrencies in South Korea, but it also means strict requirements. Crypto traders must comply with strict financial statements and checks and use trading accounts with real customer names. KYC verification procedures will also be implemented, and crypto exchanges must cooperate with Korean financial institutions from now in order to open up bank accounts with real names.
All these measures are implemented as a way of fighting money laundering using cryptocurrencies. It has happened in the past via Bitcoin casinos and similar trends have occurred globally too. The South Korean government is adamant that the new measures will curb the money laundering schemes and any violation of the new law will be punished with a fine of 50 million Korean won or imprisonment of up to 5 years. Violators will never be allowed on the market again.
The law might potentially reduce the number of traders on the crypto exchanges. However, despite the tightened laws, many crypto community members have welcomed the news with enthusiasm.
