More than one-third of Korea’s working class was actively investing in cryptocurrencies in 2021. However, for the Korean crypto market, the year was an important one for different reasons. South Korea became one of the first countries to enforce comprehensive cryptocurrency regulation. Since it was a radical move in the crypto market, 2021 turned out to be an action-packed year for the digital asset industry.
Here’s a look at key events that took place in the Korean Crypto industry this year.
Crypto Fraud Reports comes in Korea: Jan 2021
Jan 2021 showcased how the crypto fraud reports in South Korea surged over 41% over the last few months. It led to fears of centralization in the industry, and market experts predicted a strict crypto regulation policy to be imposed.
Crypto taxation fast-tracked: Feb 2021
For the much-talked 20% tax on Bitcoin and crypto profits, the Korean authorities finally set a date for the implementation. According to industry insiders, a 20% tax on crypto profits was to be levied from January 1 2022. The law targeted profits on cryptocurrencies exceeding $2300 gains.
The crypto crackdown: March 2021
On March 5, the South Korean National Assembly constituted new legislation that offered a framework to legalize cryptocurrencies. The bill also addressed the regulation of crypto exchanges. It aimed at effectively monitoring the newly developing crypto industry. Also, it planned to develop rules around anti-money laundering, among other processes.
The law regularized crypto platforms that abide by two primary regulations. The first regulation obligated exchanges to register with regional banks in their real name. The second one instructed them to obtain an Information Security Management System (ISMS) certification. Both requirements were to be met before September 21, 2021.
OKEx Korea became the first platform that shut due to the new crypto regulations in the country.
Regulatory requests: May 2021
OKEx Korea closure was followed by a fear among crypto exchanges that led them to an existential crisis.
Banning Crypto Exchange: June 2021
South Korea added new regulations that tightened the control over crypto platforms in the country. If the crypto platforms failed to meet the requirements, they would have to shut their businesses by September 2021.
Sharp fall in new crypto investor number: July 2021
Although South Korea introduced new crypto regulations that could possibly shut several crypto businesses, crypto fans continued to invest in bitcoins and other digital assets. However, the number of new crypto investors saw a sharp fall of 90%.
Smaller crypto platforms shut down: August 2021
The new rules largely affected small crypto exchanges in the country. On the other hand, several investors began to withdraw their investments from smaller crypto platforms. August also witnessed Korea getting its first official crypto exchange as Upbit registered its platform with authorities before the deadline.
Over 60 crypto exchanges closed their operations: September 2021
September was apparently the most eventful month for the crypto industry! More than 60 crypto exchanges failed to meet the regulatory deadline. As a result, the platforms were forced to shut their operations. Only four crypto platforms managed to survive the crackdown, including Upbit, Bithumb, Coinone and Korbit.
Korea officially announced 20% tax from Jan 2022: October 2021
The Korean crypto market moved on from the September storm as it sees investors showing confidence in crypto investments. The authorities officially announced the 20% tax on crypto gains to be levied with effect from Jan 2022. However, the South Korean opposition party became averse to the controversial crypto tax in the assembly.
Gaps in the tax framework, Korea delays tax implementation :November 2021
Although the regulations for the tax to be levied on crypto exchanges were officially laid down in October 2021, the authorities announced a delay in its implementation. The finance minister Hong Nam-ki spoke to the media during a conference. “It’s inevitable, we will need to impose taxes on gains from trading of virtual assets,” he stated.
Tax to be levied from 2023, gives temporary relief to investors: Dec 2021:
The South Korean government finally announced the renewed date of tax implementation. From Jan 2022, the crypto taxes will now be imposed on Jan 2023. Also, South Korea asked Apple and Google to remove crypto-based games from their app stores that promoted play-to-earn features.
In a nutshell, the Korean Crypto industry had a bumpy ride in 2021. The new policies were reportedly warmly welcomed by investors as they boosted their confidence. However, the tax rule was a controversial subject that will continue to be highlighted in 2022.
