In anticipation of the upcoming general election in April, South Korea’s ruling People Power Party is reportedly considering a series of bitcoin-friendly pledges.
According to a local media report on Monday, the party is exploring the possibility of allowing SEC-approved spot bitcoin Exchange-Traded Funds (ETFs). Moreover, it is reviewing legislative measures to approve other digital asset-related investment products that have received approval in the United States.
People Power Party Reconsiders its Stance
While the Financial Services Commission in Korea has reiterated its ban on financial institutions launching bitcoin ETFs, the People Power Party seems keen on reconsidering this stance. Earlier this month, Lee Bok-hyun, the head of the country’s Financial Supervisory Service (FSS), revealed his meetings with the SEC seeking guidance on bitcoin spot ETFs.
The party is also contemplating a gradual lift on the ban regarding institutional investment in digital assets and Initial Exchange Offerings (IEOs). Notably, the proposal involves allowing investment firms to enter the digital asset space before permitting banks or insurance companies, with a focus on safeguarding user funds.
The commitment to introduce IEOs aligns with President Yun Seok-heung’s national affairs agenda, which intends to sell virtual assets through exchanges. According to the report, the party aims to provide a “minimal safety deposit through virtual asset exchanges that have been reported to the Financial Services Authority.”
As part of its election promises, the People Power Party is also reportedly planning to establish a “Digital Asset Promotion Committee.” This committee will have substantial authority to propose laws and impose sanctions related to digital assets.
Further Digital Asset Taxation Delay
Amidst these developments, a recent report from local news outlet Herald Business Daily reveals that the right-wing party is pushing for an additional two-year delay in taxation of digital asset investment gains.
The ruling party aims to prioritize the establishment of a fundamental regulatory framework for the sector before imposing taxation. The government has already planned to propose a fresh set of regulations for the digital asset industry in the upcoming term.
The existing schedule for the country’s digital asset gains tax is set to come into effect on January 2025, having been postponed from the initial start date of January 1, 2023. A prospective further delay could potentially shift the implementation of the tax plan to 2027.
In January, a representative from Korea’s Ministry of Economy and Finance proposed that the legislative body should discuss the potential elimination of income tax on digital assets. This proposal aligns with the administration’s initiative to eliminate the planned tax on various financial investments, including stocks and funds.
Targeting Young Voters
As the election season approaches, these proposed pledges signal a notable shift in South Korea’s political landscape, recognizing the growing adoption of digital assets among the younger demographic.
It is interesting to note that the People Power Party’s election promises appear strategically tailored to attract the votes of citizens in their 20s and 30s. Notably, according to the National Tax Agency’s data, 80% of digital asset holders in the country fall within this age bracket as of September 2023.
