The South Korean Ministry of Economy and Finance has announced the postponement of the crypto tax by one year. The National Assembly passed a bill on Tuesday that stated the delay of crypto tax policy trading until 2023.
The ministry had declared earlier that it will impose a tax on crypto capital gains applicable from 2022. However, nearly a month ago to January, the new bill revised the taxation commencement date.
Once South Korea officially rolls out the tax policy, it will impose a 20% tax on capital gains above $2.5 million derived from cryptocurrency trading with effect from January 2023.
In September this year, more than 50% of crypto exchanges in the country had to close down due to new regulations laid down by the ministry. Korea’s Financial Intelligence Unit enforced a new policy according to which the exchanges had to register with Korean regional banks with real-name accounts. Companies failing to do so had to announce partial or complete closure of their operations.
Additionally, the FIU asked crypto exchanges to submit a security certificate from the internet security agency. Both regulations aimed to ensure the safety of their platforms and customers. The ministry also planned to curb fraudulent cases through new regulations. The exchanges that could not meet any of the prerequisites were asked to shut down the business by September 23.
Out of 60 crypto exchanges platforms in the country, around 40 closed their operations as they could not meet any of the regulations. From the remaining 28, although they managed to obtain security certificates before the deadline, the companies could not secure bank partnerships as expected.
At present, only four crypto exchanges in the country are officially running operations, including Upbit, Coinone, Korbit and the recently added Bithumb. All these platforms met the guidelines set by FIU before the deadline. However, Bithumb had to wait 72 days to get their license.
With the four companies officially operating crypto exchanges in association with Korean banks, they will be able to offer won as an option on their platforms.
Although South Korea has made crypto operation regulations stricter, the delay in taxation is a sigh of relief for many. Most crypto parties in the country have not happily welcomed the newly laid down rules. The regulations are likely to cost traders around $2.6 billion, which happens to be a considerably big amount.
