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South Korea is currently looking to tax capital gains from cryptocurrency transactions. A bill on these lines will be drawn up by the country’s Ministry of Economy and Finance and is slated to be introduced in tax regulations next year, Korea Times reported.
South Korea is the third-largest market in the cryptocurrency industry, only lagging behind the U.S. and Japan. In January 2019, an estimated $6.8 billion in cryptocurrency transactions took place in the country even though the nascent industry was experiencing what experts called the crypto winter.
Drafted alongside the crypto capital gains regulation is another bill that will provide more transparency on digital currency transactions. The law is already being created by the National Assembly and is expected to come into effect a year after its proclamation.
A clear definition
Regardless of the bill’s passage, the South Korean government is still pushing forward the initiative although there are certain requirements that need to be filled first. Among them is providing a clear definition of what constitutes as a virtual asset.
It also needs to clarify if proceeds gain from crypto trading should be treated similarly to traditional trading involving stocks and real estates. If so, then the government may mandate crypto exchanges to provide trading records so that the regulation could be applied fairly across the board.
South Korea continues to monitor its crypto industry
This bill comes in the wake of South Korea clamping down on unregistered crypto exchanges. The government said last week that crypto exchanges need to register with the Financial Services Commission (FSC) or the firm’s bosses could face a hefty fine or serve time behind bars.
The rise of cryptocurrencies and crypto exchanges has brought with it a slew of headaches including a spike in fraudulent activities, which saw an upsurge of 900% in 2016. South Korea means to significantly decrease that figure that’s why it’s been trying to put up a strict but fair regulatory framework around the disruptive technology.
Meanwhile, the country is accelerating its blockchain adoption and is ready to shell out 450 billion won (approximately $382 million) for research and development over next six years. South Korea is currently looking to implement the technology in multiple sectors including finance, defense, medical services, and more.
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