[NEWS] South Korea's largest opposition party agrees to postpone cryptocurrency tax until 2027

On the 1st, the Democratic Party of Korea, the largest opposition party in South Korea, announced that it had agreed with the government and the ruling party, People's Power, to postpone the implementation of taxation on cryptocurrency profits until 2027.

In South Korea, a 20% tax was scheduled to be imposed on profits generated from cryptocurrency from January next year. While the South Korean government proposed a two-year postponement, People's Power sought a three-year postponement. It appears that the aim of taxing cryptocurrency was to avoid investors withdrawing and rapid changes in the market environment.

Initially, the Democratic Party of Korea was positive about taxation from January next year, but changed its policy after receiving backlash from the cryptocurrency industry and others. It proposed raising the taxable amount from the previous 2.5 million won (about 270,000 yen) to a maximum of 50 million won (about 5.3 million yen). Since there are few investors in South Korea who have made profits of more than 50 million won from cryptocurrency, the proposal was mainly focused on large investors.

South Korea has postponed taxation of crypto assets in the past. It was originally scheduled to come into force in 2021, but was later postponed until 2023. It was also postponed until 2025, taking into consideration the impact on investors and the market.

Meanwhile, South Korea is making progress in developing regulations regarding crypto assets. In July of this year, the "Cryptocurrency User Protection Act," which provides for the protection of cryptocurrency users, came into force.

This bill defines tokens that qualify as crypto assets and requires that customer assets be stored and managed by trusted financial institutions such as banks. It also requires that more than 80% of customer assets be stored in cold wallets.

Those who engage in illegal cryptocurrency transactions are also subject to severe criminal penalties and fines, and those who make illegally obtained profits between 500 million won (approximately 53.4 million yen) and 5 billion won (approximately 534 million yen) will be sentenced to three years in prison.

Reference: Press
Image: Shutterstock

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