South Korea Hints it Might Apply Tax on Cryptocurrencies and Initial Coin Offerings

Cryptocurrencies have been the new ‘big thing’ at least since mid-2017. Bitcoin gained a price of nearly US$20,000 in December last year. However, prices of Bitcoin and other cryptocurrencies plummeted in January 2018. They have continued to struggle to gain back the lost ground ever since with little to show for it.

The world is starting to calm down about the phenomenon of cryptocurrencies, it would seem. The focus is shifting from cryptocurrencies to blockchain technology, which is the underlying technology of cryptocurrencies. Governments are finally starting to grasp the concept and legislature is being passed to oversee and control this new market. South Korea is one such example. The new nominee for finance minister Hong Nam-ki has announced that South Korea is planning to tax cryptocurrencies and Initial Coin Offerings (ICOs).

Mr. Nam-Ki submitted his written answer to the National Assembly of South Korea on Sunday for his confirmation hearing. Hong said that the taxation plan would be finalized in accordance with the creation and progress of the taxation infrastructure and the trend on international discussions. He also talked about a task force in his submission. This task force will be consisting of experts from relevant government agencies including the National Tax Service and the private sector. The job of this task force would be to examine overseas examples of taxation systems on ICOs and cryptocurrencies and hammer out the taxation plan of South Korea for these subjects.

“Cryptocurrencies are a new phenomenon and so there is no internationally agreed regulatory framework. Furthermore, there are such lingering problems as the market overheating and the investor protection. Therefore, we need to be careful in building the regulatory framework,” Hong wrote in his answer. He also commented on the ban on ICOs in South Korea saying that whether or not to lift the ban would be carefully considered after watching market conditions and international trends and investor protection issues. He wrote, “We will determine our policy orientations on ICOs with the relevant agencies after reviewing the results of the financial regulator’s market survey and getting feedback from experts.”

He also talked about his government’s policy to exclude crypto exchanges from the category of startup businesses. “We will do our utmost to nurture blockchain technology as nine out of 10 business types classified as blockchain-related businesses by Statistics Korea excluding the crypto exchanges can be still acknowledged as venture companies,” Hong said.

The crypto world looks on as the South Korean government finalizes its plans. Governments across the globe are starting to accept and acknowledge cryptocurrencies and blockchain. However, this also means that new laws and regulations will be introduced, drastically limiting the powers and implications of this technology for the crypto market.