South Korea’s democratically elected President has shown his understanding of cryptocurrency. The President has announced that there would be no imposed tax on cryptocurrency investment profits until laws can be put in place to safeguard consumers.
President Yoon Delays Implementation of Cryptocurrency Taxation
In a Tuesday announcement, South Korea’s President, Yoon Suk-yeol, said that he would work to have taxes on cryptocurrency investment profits deferred until a set of regulations known as the Digital Asset Basic Act (DABA) is adopted.
South Korea’s cryptocurrency tax was originally scheduled to take effect in 2022, but it was postponed until 2023 in December. According to E-daily news media, Yoon will make sure that the cryptocurrency tax bill does not go into law until acceptable consumer protection legislation has been put in place, which might be as early as 2024.
Since Yoon was elected President, his team has been examining alternatives for postponing the tax as there are no laws in place to warrant imposing taxes on crypto assets.
Investors’ Rights Will Be Protected by the DABA
Earlier this year, South Korea’s Financial Services Commission (FSC) proposed the Consumer Protection law, DABA, which includes several rules relating to investor protection. A reaction to Biden’s executive order on cryptocurrency is also part of the act. Other areas covered include token issuances, NFT, centralized exchange listings, and international finance for cryptocurrency.
The FSC intends to introduce a crypto-insurance framework through DABA as a precautionary measure against system errors, hacks, and illegal transactions. The controversial cryptocurrency tax law, which has been postponed once again, would impose a 20% tax on cryptocurrency investment earnings exceeding around $2,100 each year.
On Tuesday, a representative from the FSC told e-daily that “imposing charges on income generated from crypto will be done after the relevant framework to protect the rights of investors have been established.”
Simon Kim, the founder of South Korean Crypto Venture firm, Hashed, pointed out to Cointelegraph that imposing a tax on crypto before passing relevant laws will clearly define the scope of the industry and how to carry it out makes no sense.
In the absence of thorough industry analysis and rigorous implementation plans, boosting taxes on cryptocurrencies can produce a range of mishaps and raise specific severe concerns in taxation fairness, given the lack of a client protection scheme for cryptocurrencies.
While the FSC is working on new legislation that will be part of the DABA, the President intends to create the Digital Business Promotion Agency, which will act as a clearinghouse for information on regulatory concerns affecting the cryptocurrency industry.