South Korea to introduce a cryptocurrency tax

South Korea has been a hub of cryptocurrencies lately. Their advances in the digital world truly make it a safe haven for some savvy entrepreneurs of the crypto sphere. Even behemoths of the industry like Binance have taken a liking to the South Korean environment in terms of cryptos, but that lovely relationship may come crashing down as rumors have it that South Korean authorities are preparing for some tough taxations.

What? Who? Where?

The financial authorities haven’t said anything definitive, however, the country’s minister of Economy and Finance, Hing Nam-ki has confirmed the rumors by saying that the authorities are looking into it.

Hong, a member of South Korea’s ruling Democratic Party has also disclosed the information that the authorities are looking outward for inspiration, looking at foreign policies and trying to learn how some countries deal with the tax as a whole. In this case, the best case study would be Gibraltar and Malta, as they’re being regarded as crypto hubs for all the crypto enthusiasts.

Who’s searching?

The research is being done by a “Task Force”, which is nothing like you see in the movies. These are people with a keyboard, internet and a lot of analytical skills. They’re rumored to be comprised of members of relevant government departments and private experts of the matter. However, Hong has clarified that no serious steps are to be made until a thorough research shows that it is indeed beneficial and realistic to introduce the tax.

What’s even more puzzling is the news about potential ICO taxes. The fact itself is very hard to comprehend as the authorities themselves have it just on the idea stage. No clear roadmap has been created and Mr. Hong is not hiding it. According to him, the authorities need to take a good look at the matter, consider all of the world trends and the direction that ICOs go. In his words, the idea was born because of investor protection as ICOs are mostly the cases people get scammed by.

According to Hong, the financial authorities of the country are relying on their research team and expert opinions on the matter, therefore the idea of an ICO tax has still a long way to go.

Not a new trend

The taxation and new utilization of cryptocurrencies are not something new to the world. As already mentioned Gibraltar and Malta are way ahead, but not because of a  tax, but because of the way they treat cryptocurrencies. In terms of case studies, South Korea could definitely use Spain. Being so close to Gibraltar is bound to have some kind of effect on the whole situation on Spain, and it did, but not the type you’d expect.

Spain’s authorities made it illegal to remain anonymous when making cryptocurrency transaction or even holding them. After a successful survey and search most of the crypto holders in Spain have surfaced, therefore making it possible for them to introduce the tax they’ve been planning.

The other case study that can be analyzed by the South Korean experts could be the US state of Ohio, which now allows its citizens to make their tax payments in Bitcoin, ultimately digitalizing the state. However, there are many factors to take into account for South Koreans, as the economic landscape and the financial situation of these case studies are vastly different.

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Konstantin Rabin

About the Author: Konstantin Rabin

Konstantin has been working in the financial services industry since 2011. He is over-viewing various updates in the technology, regulation, and market movements. He's passionate about games and has a cute cat named Dog.

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