The new president of South Korea Yoon Suk-yeol wants the country to lead the crypto market. Recently, he vowed to deregulate the virtual asset industry and expects to set a more amicable regulatory framework in order to promote local growth.
“To realize the unlimited potential of the virtual asset market, we must overhaul regulations that are far from reality and unreasonable,” Yoon Suk-yeol said at a virtual asset forum at a Seoul hotel.
Yoon believes that the country “must shift to a negative regulation system to ensure at least the virtual asset market has no worries,” and has proposed measures to assure that South Korea’s crypto industry can be a house to new unicorns, startup companies valued over $1 billion.
His campaign targeted voters in their 20s and 30s who want the country to open up the doors to the booming crypto industry. Reportedly, before strict measures were taken, local retail traders were starting to turn to digital assets and buying less traditional stocks, but the government aimed to curb the hype.
The latest global political push towards digital assets might be setting an example to many other politicians about how supporting crypto could win them an election.
Related Reading | South Korea’s 4 Biggest Crypto Exchanges Slam The Door On Russian Users
South Korea’s Current Regulatory Framework
Freeman Law explains that “starting in January 2018, the South Korean government sought to regulate cryptocurrency trading by restricting trading only from real-name bank accounts.” The country’s very restrictive measures do not allow foreigners and minors to trade cryptocurrencies.
In early 2020 the government introduced an amendment to the Act on the Reporting and Use of Specific Financial Transaction Information.
This new framework legalized cryptocurrencies and established compliance measures. The crypto exchange regulations remain strict as well as the rules on the customer’s age limits, restriction for foreign or anonymous traders to withdraw funds from e-wallets, cash withdrawals, and so forth.
Moreover, there is a proposed tax framework that has been delayed to 2023 due to backlash from investors. The finance committee of the South Korean National Assembly intends to defer a 20% to 25% tax on crypto profits over 2.5 million Korean Won (about $2,100).
Citizens would have to pay tax on any inherited crypto-assets, as well as the ones received as gifts regardless of the gifter (family, friends, acquaintances, etc).
What Can Change With The New Presidency
The president-elect has pledged to revise these tax measures and proposed to raise the threshold for capital gains taxes to 52.4 million Korean Won (US$42,450), meaning that any gains below that mark would be tax-free.
Yoon intends to sign the “Basic Digital Asset Law”, which would protect investors and companies by offering an insurance policy to secure them from the loss of their assets to hacks, fraud, cyberattacks, and other illegal activities.
“I will foster a digital asset investment environment similar to the stock market to ensure young people can enter new markets without fear,”
Although the elected president can realize some of his proposals through presidential orders, he might face some obstacles with the no-tax proposal, which needs to be reviewed by the National Assembly. New regulations of digital assets will also need legislators to pass a bill and set up an agency.
South Korea is placed among the world’s top five technological innovators and it is among the top ten economies. More amicable regulations to institutionalize and advance the digital asset industry could turn into huge growth and adoption, and then they might not be as far from becoming a crypto hub.
Related Reading | South Korea Maps Out $187 Million For Its National Metaverse Project