South Korean lawmakers allowed a long political battle on Thursday, blocking measures by the ruling party to delay the enactment of the controversial cryptocurrency tax law.
At a meeting on Tuesday, but only Thursday, Treasury Minister Hon Namki and key Democratic lawmakers from the National Assembly, a South Korean MP, reached a final agreement that the cryptocurrency tax would be introduced as planned.
The Korean cryptocurrency tax will tax profits from cryptocurrencies similar to those generated by traditional stocks. This would require a 20% tax on income from cryptocurrency transactions over 2.5 million won, or roughly $ 2,100.
The Democratic Party, which has a majority in the National Assembly, tried to pass an amendment to the tax bill that would postpone tax payments until 2023. The representative of the Democratic Party Kim Byung Wook at an open meeting on September 15 proposed to introduce a capital gains tax on cryptocurrency should take place. Introduce it together with a similar share tax in 2023 instead of 2022.
While the ruling majority should theoretically have the number needed to approve the changes, they faced strong opposition from Finance Minister Hong, who has considerable power and has held many leadership positions in the country, including the prime minister.
Minister Hong has repeatedly stated throughout 2021 that the tax will take effect as originally planned, and went as far as stating that a cryptocurrency tax was imminent in 2022.
At least twice since May, Minister Hong has reaffirmed his firm stance on the ruling Democratic Party that the cryptocurrency tax will take effect immediately.
Despite Hung’s victory, some crypto industry insiders are concerned that the new tax will lead to a drop in trading volume and general interest in the industry.
But Jun Hyuk Ahn, a Korean cryptocurrency analyst, believes there is no reason to worry about falling interest rates. He told Cointelegraph:
“I don’t think taxes will hold back the cryptocurrency market in Korea. We saw what happened in the United States and things will be different here. ”
The new legislation complements the new cybersecurity rules that have recently left several Korean stock exchanges from the market. Only 29 crypto exchanges met the deadline until September 24.
Of the 29, only four have real partnerships with local banks, which gives them the legal right to continue offering KRW trading pairs. These four are Upbit, Bithumb, Coinone, and Korbit. The other 25 exchanges are ISMS (Internet Security Management System) certified and offer trading pairs ranging from cryptocurrency to cryptocurrency.
On the subject: Bybit crypto exchange suspends services in South Korea
Starting Friday, Upbit will require all users trading over 1 million won (US $ 842) to complete the KYC procedure, and all users trading all amounts will also have to complete this by October 8th. The new KYC process aims to bring stock exchanges in line with anti-money laundering measures.
Korean stock exchanges such as Upbit have previously used a bank account in their real name and the Kakaotalk messaging app as their de facto KYC mechanisms. Bithumb, Coinone, and Korbit are expected to follow Upbit to demand more KYC from users.