Taxation on cryptocurrency transactions in South Korea

The South Korean government intends to introduce taxation on cryptocurrency transactions, considering them as capital gains. The plan was released by The Korea Times, which claims that the government and the Ministry of Finance will implement this legislation by mid-2020.

In order to implement this bill, the government will have to define cryptocurrencies as a whole. Digital assets need to be defined in a manner similar to shares, currencies or other assets that are considered investments.

Also, such a law will allow the authorities to obtain information on transactions from exchange platforms in the country.

Such a move could be a severe blow to South Korea’s many blockchain projects. Crypto analysts believe utility tokens used on different platforms could fall into the category of taxable assets.

Taxation on cryptocurrency transactions

Another important aspect is the relationship between South Korea and North Korea. A tax measure could allow the government to identify users in North Korea who are trading in the neighboring country.

Worldwide, it has been widely speculated that malicious actors in North Korea use cryptocurrencies to launder money.

South Korea is one of the countries with a very well developed crypto ecosystem. Part of the attraction of this field is that it offers financial benefits to the users. A tax system could significantly affect the profits of the traders. It remains to be seen whether the government will succeed in imposing such legislation.