South Korea Could Tax Cryptocurrency Profits Soon
South Korea is regarded as one of the world’s strongest cryptocurrency markets. The Asian country has robust regulations and a lot of users. It is ranked as the third biggest market for Bitcoin (BTC), behind the US and Japan. However, might government plans to start taxing cryptocurrency profits have an effect?
What Are the Plans?
The Korea Times reported this possible tax. They say that the Ministry of Economy and Finance is behind this proposed move. An un-named official is quoted as saying that the bill will be created “in the first half of the new year”.
The country’s National Assembly is also looking at a bill involving transparency on cryptocurrency trading. It is reported that it could come into force a year after it is approved.
The overall aim is to introduce a capital gains tax on cryptocurrency profits. To do this, they need to more clearly define the digital assets that will be covered. The authorities need clarity on whether the gains on crypto coins should be dealt with in the same way as the likes of property transactions or stock market deals.
Another point to be covered is the need to get official figures from cryptocurrency exchanges. This will allow the government to see what trades have been carried out. Exchanges here have introduced self-regulation in the past when needed.
How Will This Affect Cryptocurrency Users?
A big effect for investors will be the fact that anonymous accounts will no longer be accepted. People who buy and sell altcoins will need to use real-name account on crypto exchanges. The exchanges will then need to keep detailed records of each user, together with their personal data.
The question to be asked is whether this level of control will turn people away from Bitcoin and other virtual currencies. Trading anonymously is already almost impossible in South Korea. With the new laws, an extra layer of control will be added to the process.
South Korean cryptocurrency activity has dropped in 2019. The Korean won currency is part of under 1% of all BTC trades just now. Despite this, the idea of buying and selling Bitcoin remains popular in the country. This is one of the main sources of cryptocurrency profits that would be getting taxed.
A Global Trend for More Control and Regulation
South Korea isn’t the first country to look at the idea of taxing profits on cryptocurrency trading. The government in Ukraine has recently revealed that it will legalise cryptos. As part of this, they will levy an initial tax rate of 5% on profits.
This is part of global moves towards the regulation of digital money that we have seen in numerous countries. South Korea will give us one of the first examples of how investors react to more control and having to paying tax on their cryptocurrency profits.