South Korean lawmakers have approved a delay in the implementation of a capital gains tax on cryptocurrencies until January 2027, following consultations with industry experts and investors.
Diverging Proposals on Taxation
The government initially proposed a two-year delay, while the ruling People Power Party suggested a three-year postponement. However, the Democratic Party opposed both proposals and instead advocated for increased tax exemptions on cryptocurrency profits. Their proposal aimed to raise the tax-free threshold on digital asset gains to 50 million won, significantly higher than the current 2.5 million. They argued this would address small investors' concerns without delaying the law's implementation. Despite the compromise on delay, Park confirmed the Democratic Party's opposition to the government's inheritance and gift tax reform bill, viewing it as favoring the wealthy.
Booming Crypto Market Highlights
Data from South Korea’s Financial Services Commission underscores the rapid growth of the nation’s cryptocurrency market. Daily trading volume surged 67% during the first half of 2024, reaching six trillion won, while the number of investors grew by 21% to 7.78 million. Bitcoin and Ethereum remain dominant in trading activity.
Regulatory Steps Forward
In October, Finance Minister Choi Sang-mok introduced a new regulatory plan for digital assets and stablecoins. The proposed framework requires cryptocurrency companies to register with authorities and submit monthly transaction reports to the Bank of Korea. This regulatory approach aims to establish a transparent and stable environment for cryptocurrency businesses and users.
The delay in implementing the cryptocurrency capital gains tax until 2027 in South Korea reflects the nation's intention to support innovation and investor protection, requiring thoughtful regulatory approaches.
