South Korea didn’t declare war on cryptocurrencies like China, but the country adopted a very tough regulatory stance on digital assets. It made KYC compulsory and banned anonymous trading, placing several other restrictions in place for the country’s crypto market. Now, it could soften its stance. Reports suggest that the country will be following the regulations set by the G20 nations. The group aims to create ‘unified regulations’ in the crypto space for simplification and better management. Regulators in Korea have also agreed to execute the standards of the Financial Action Task Force to its crypto space and make policies in accordance.
Korea Times reported that the G20 nations- Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, United States, and the European Union will create a unified framework for crypto regulation. All the top financial regulators and lawmakers in the country have agreed to work together. They will acknowledge cryptocurrencies as financial assets too.
The report reads, “Financial policymakers of G-20 nations have set a July deadline for the first step toward ‘unified regulations’ of cryptocurrencies. One reason for the move by the G-20 is that they see cryptocurrencies as ‘too small to jeopardize’ financial markets. The combined market value of cryptocurrencies is less than 1 percent of the global GDP.”
The Korean government never acknowledged these coins as financial assets but per the new G20 regulations, it will. The regulators were unsure that the speculative nature of these assets could be treated as traditional financial assets. The Financial Supervisory Service (FSS) said, “It’s almost certain that cryptocurrencies will be classified as assets and the main issue will be centered on how to regulate them properly under the unified frame that will be agreed upon between G-20 nations. Given the current stance, this isn’t good, but we will step up efforts to improve things.”
The new chief of FSS also said that he would ease up the tight regulations around the crypto market, suggesting that there are several positive aspects of these coins that should not be missed. He also said that these digital assets had a good promise for the future.
The National Tax Agency has been actively working with the finance ministry to ensure that a streamlined, robust tax structure is used for digital assets. The transactions are currently tax-free, but the operators must pay taxes on their income. Note that FSS has simultaneously launched investigations into digital currency exchanges. Four employees of different exchanges were arrested in March, including those of Coinnest. This week, they arrested people from HTS Coin with charges of embezzlement and fraud. A fresh inquiry was launched last week into Upbit, the largest crypto exchange in the country.
As Korea moves to create newer, softer regulations, the people dealing in these coins could have to pay an income tax. Though details of the G20 plan are still unclear, it is likely that regulators would charge taxes on similar grounds to traditional financial assets.
