South Korea to introduce a capital gain tax on crypto transactions
After much deliberation, it looks like the South Korean government is going to go ahead with its implementation of the capital gain tax on crypto transactions.
The news was reported by The Korean Times right when another assembly was negotiating about passing a bill for a more transparent crypto industry in the country. Should either of these bills pass, it’s planned to have them come into effect within a year or so.
However, the capital gain tax is more likely to be implemented within the first half of 2020 due to its massive demand for the maintenance as well as governance of the local markets.
South Korea, as we all know is one of the biggest crypto hubs in the world. A majority of crypto exchanges choose Seoul as their base of operations, which is why the local market is suffering so much from volume loss.
Why the sudden decision?
It can be said that the South Korean government was one of the most crypto-friendly centralized powers in the world, considering the allowance of so many crypto exchanges into the local economy.
However, that liberal approach started to dwindle once new regulatory decisions started to be made. Things such as blocking any unidentified transactions to and from South Korea, which meant the government would have full access to crypto exchanges, as well as another introduction on capital tax gain on dormant crypto accounts.
Now though, every transaction will be subject to the tax, meaning that the government will have to pay even more attention to how much of a specific cryptocurrency is transacted out of an individual wallet to another. Should any massive gain be made within the timeframe of the transaction, it will be considered as miscellaneous income, thus taxed accordingly.
Security concerns
Another major issue is security concerns, primarily from North Korea. We’ve already witnessed multiple attempts by the DPRK to hack into South Korean blockchain databases, which were relatively new during the attempt. It has even been reported that some of the blockchain systems being accessed by North Korean hackers belonged to the government, thus containing classified information.
Considering that the South Korean government is looking at blockchain as a serious alternative for data storage, it’s only logical to see them become extra cautious about the technology’s safety in both the short and long runs.
By identifying transaction sizes and identities through added tax, the government would be able to shortlist whales, regular traders and insignificant wallets as well, thus making information a lot more accessible.
