A plan to tax cryptocurrencies and initial coin offerings (ICOs) is underway in South Korea, this according to finance minister nominee Hong Nam-ki.
The Korea Times has reported that the nominee submitted a written answer to the National Assembly on Sunday, 2 December, during his confirmation hearing. According to the article, Hong said that the plan to tax crypto and ICOs would be completed once the taxation infrastructure has been created and furthermore, based on sentiments drawn from international discussions, saying:
“A task force consisting of experts from relevant government agencies including the National Tax Service and the private sector will be formed to examine overseas examples and hammer out the taxation plan.”
Hong rather specifically describes cryptocurrencies as “electronic signs of values issued privately”; he said there are around 2,000 digital tokens being traded on a global level and 160 in South Korea.
He writes, “Cryptocurrencies are a new phenomenon and so there is no internationally agreed regulatory framework… Furthermore, there are such lingering problems as the market overheating and investor protection. Therefore, we need to be careful in building the regulatory framework.”
His words are typical of those who seek to establish an accommodating environment for the technology. Previously, the governor of South Korea’s Financial Supervisory Service (FSS) urged members of the global community to seek out an “international discipline system” for cryptocurrencies and ICOs. In his speech, the governor described the need to encourage financial innovation, while aiming to cool the “overheated speculation” of the markets, minimize consumer risks and tackle illegal activities associated with cryptos.
In August, the South Korean Blockchain Enterprise Promotion Association (BEPA) made calls for the government to act faster in its efforts to regulate blockchain and cryptocurrencies. BEPA criticized the government for giving too much focus to the “negative short-term-side effects” and instead stifling the nation’s ability to compete on the world stage.
Hong offered his thoughts on the matter, believing that the exclusion was due to crypto exchanges being criticized for their vulnerabilities to illegal activities, and this move was a reflection of such sentiments.
He adds: “We will do our utmost to nurture blockchain technology as nine out of the ten business types classified as blockchain-related businesses by Statistics Korea excluding the crypto exchanges can be still acknowledged as venture companies.”
In the following discourse, fears over domestic enterprises moving to other countries soon became a reality when cryptocurrency exchange Bithumb was sold off to a Singapore-based consortium. As a result, a South Korean lawmaker proposed a bill that would provide the structure for the development of exchanges, “tax reduction and exemption” and guidance pertaining to security issues.
With regards to the contentious topic of ICOs, which remain banned with an official decision still pending, Hong said, “We will determine our policy orientations on ICOs with relevant agencies after reviewing the results of the financial regulator’s market survey and getting feedback from experts.”
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