South Korea Postpones Crypto Taxations; Repeals 2017 ICO Ban

Bitcoinist May 7, 2022
Updated 2022/05/07 at 7:01 AM
4 Min Read

South Korea’s incumbent president Yoon Suk-yeol has decided to delay the crypto taxation by reportedly wanting to adopt a different regulatory framework.

President-elect Yoon is quite firm on remaining crypto-friendly as he might lift the ban on Initial Coin Offering (ICO) that was imposed in 2017.

This move is one of the many other important actions that Yoon’s Presidential Transition Committee shall be working on in order to remain friendly towards digital assets.

The motive behind doing so includes providing an appropriate environment for investors to trade digital assets with ease.

The delay in planned taxation can be amounted to an absence of a proper taxation system along with fitting measures that are supposed to safeguard investor interest.

South Korea is now the latest country that has set out to reform digital asset regulations by relaxing them further.

The Lift Of The ICO Ban Is A Part Of A Broader Crypto Pledge

The approval of the ICO is just one of the other 110 tasks that the Presidential Transition Committee has decided to execute.

Regulatory measures and plans have been divided into two segments, one that segregates securities  from non-securities.

The to-be confirmed nominee for deputy prime minister and finance minister, Choo Kyung-ho has supposedly said that the taxation from 2025 can be expected to be a lot more crypto-friendly.

It could be the case because a clear and concrete legally accepted definition of cryptocurrency assets is supposedly soon to be released.

The current proposed bill shall be closely observing and accessing the listing and insurance processes of digital assets.

Reports from local outlets say that the Digital Asset Framework Act just wants to ensure a safe and certain environment for investors to gain confidence.

The report also stated that, in terms of maintaining a regulatory stance, the committee shall follow the viewpoint of international financial institutions such as the Bank of International Settlements (BIS) and US executive agencies.

Related Reading | Cardano, Ripple Make Most Popular Crypto List In South Korea

Crypto Has Seen Considerable Gain In Usage

Yoon Suk-yeol is reportedly of the opinion that deferring the taxation on crypto-gains is the correct way to go till the Digital Asset Basic Act (DABA) is passed.

The ban in 2017 on ICO was imposed owing to the nature of the asset which is a highly volatile asset along with many illegal and criminal activities being facilitated by the same.

The cryptocurrency regulation framework in South Korea has been relaxed of late, in 2020, cryptocurrency in the country was regulated and legalised.

Since President-elect Yoon Suk-yeol has stayed firm on introducing crypto taxation only when a proper protection framework is introduced, the crypto tax law will not come into effect before 2024.

No specific taxation scheme and standard has been decided on, however, the finance ministry of the country might re-classify returns on the digital asset as “other income”. The profits from the digital asset will be considered in the same category and that means falling under the 20% bracket.

Tax levied on “other income” is comparatively high, however, it still is a lot less compared to tax imposed on cryptocurrency currently, which can go as high as 42%.

Suggested Reading | Samsung Throws In $25 Million In South Korean Metaverse Startup DoubleMe

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