South Korea Party Delays Crypto Tax For Regulation Reform

South Korea’s ruling People Power Party is advocating for a two-year postponement of the taxation on gains from cryptocurrency investments. The move is a potential campaign promise for the upcoming general election scheduled for April. The party prioritizes establishing a comprehensive regulatory framework for cryptocurrencies before implementing taxation measures.

According to local media outlet Herald Business Daily, the right-wing party intends to propose new regulations addressing the crypto industry in the upcoming term. By focusing on regulatory measures first, the party aims to delay the implementation of the crypto gains tax, which is currently slated to take effect in Jan 2025. This proposed delay would push the tax plan to start in 2027.

Furthermore, as part of its election campaign strategy, the ruling party is considering introducing a bill encompassing essential elements for potential crypto regulations. These regulations may include requirements for crypto custody providers and guidelines for token listing. If implemented, these regulations would supplement South Korea’s initial set of crypto regulations, which are set to become effective in July. The People Power Party plans to finalize its core election promises by the end of the month.

In a recent development, a representative from South Korea’s Ministry of Economy and Finance suggested that the country’s legislative body discuss the possibility of abolishing income tax on crypto assets. This suggestion aligns with the current administration’s initiative to scrap the planned tax on financial investments, including stocks and funds. However, the People Power Party does not ostensibly explore a complete abolition of the proposed cryptocurrency taxation, as reported by the Herald.

South Korea: Crypto Tax Reform & Global Collaboration

Alongside advocating for a tax delay, the party also aims to harmonize the cryptocurrency tax threshold with that of stocks. Currently, the tax plan imposes a 22% tax rate on crypto gains exceeding 2.5 million Korean won (approximately $1,875). Moreover, we only tax stock gains when they surpass 50 million won.

Additionally, in December last year, South Korea announced that high-ranking public officials must disclose their cryptocurrency holdings starting next year. At the time, the country’s personnel ministry said this proactive approach addressed potential conflicts of interest and promoted integrity within the public sector.

The requirement would apply to high-ranking officials across various government agencies and departments. These officials must report their cryptocurrency holdings, including details of their assets and their respective amounts.

Furthermore, Lee Bok-hyun, South Korea’s head of the Financial Supervisory Service, aims to visit the United States later this year and discuss the crypto industry with U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler.
This The official plans to talk to Gensler about spot Bitcoin ETFs. They will explore potential collaborations or regulatory harmonization efforts between the two countries in the rapidly evolving digital asset landscape.

As the global crypto ecosystem continues to expand and mature, regulatory clarity and unified approaches have become increasingly crucial for fostering innovation while mitigating risks.

South Korea’s proactive stance on addressing cryptocurrency regulations and taxation underscores the country’s commitment to adapting to the digital asset revolution while ensuring robust investor protection and market integrity.

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Furthermore, the author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.

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