South Korean lawmakers settled a protracted political battle on September 30, preventing the ruling party from delaying enforcement of controversial crypto tax laws.
At a meeting on the 26th reported yesterday, Finance Minister Hong Nam-ki and leading Democratic MPs in the National Assembly, South Korea’s legislative body, they would definitely have agreed on the planned implementation of the crypto tax.
The Korean crypto tax will impose a tax on the profits of cryptocurrencies similar to that of traditional stocks. It will impose a 20% tax on revenue from cryptocurrency transactions that exceed 2.5 million Korean won, or about $ 2,100.
The Democratic majority party in the National Assembly tried to pass an amendment to the tax law that would have postponed the tax until 2023. Democratic lawmaker Kim Byung-ook proposed in a public session on Sept. 15 that capital gains tax be levied on crypto in 2023 along with a similar tax on stocks instead of 2022.
Although in theory the majority party in power should have had the required number to pass the change, met with fierce opposition from Finance Minister Hongwho wielded considerable power and held many high-ranking positions in the country, including that of Prime Minister.
Minister Hong repeatedly stated during 2021 that the tax would go into effect as originally planned, and even went so far that crypto taxation would be inevitable by 2022.
At least twice since May, Minister Hong has reiterated his firm stance with the ruling Democratic Party that the cryptocurrency tax would take effect immediately.
Though it’s a win for Hong some insiders in the crypto industry fear the new course will lower trading volume and general interest in the industry.
Nevertheless, Jun Hyuk Ahn, a Korean cryptocurrency market analyst, They think there is no need to worry about falling interest rates. He told Cointelegraph:
“I don’t think taxation will scare off the Korean cryptocurrency market. We saw what happened in America and it won’t be much different here. “
The new legislation complements the new cybersecurity regulations that have resulted in the recent exit of many Korean exchanges. Only 29 crypto exchanges met the September 24 deadline for compliance.
Of these 29, only four have obtained partnerships with real bank accounts with national banks, which gives them the right to continue offering KRW trading pairs.. These four are Upbit, Bithumb, Coinone, and Korbit. The remaining 25 exchanges are certified by the Internet Security Management System (ISMS) and will offer crypto-to-crypto trading pairs.
From today, Upbit requires any user trading more than KRW 1 million ($ 842 USD) to submit to KYC, and all users trading any amount must also do so before October 8th.. The purpose of the new KYC process is to align the exchanges with anti-money laundering procedures.
Korean exchanges like Upbit previously used the real-name bank account and its messaging app Kakaotalk as de facto KYC mechanisms. Bithumb, Coinone and Korbit are expected to follow Upbit and demand a higher KYC from their users.