Yoon Seok-yeol, South Korea’s newly elected president, is looking to defer taxation on crypto investment gains until a new set of regulations – namely the Digital Asset Basic Act is enacted. The crypto tax was initially set to come into force for the 2022 fiscal year. But it was pushed back to 2023 in December 2021.
The new president will ensure that the crypto law does not come into effect until reasonable legislation is put in place to protect consumers. And this could come in 2024. Yoon’s presidential transitional team is exploring options in delaying the tax since March on the grounds that there was insufficient legislation in place to justify taxes on digital assets.
The Digital Asset Basic Act was brought about by the Financial Services Commission (FSC). It entails a series of laws related to consumer protections. The legislation pertains to token issuances, NFTs, centralized exchange (CEX) listings, and international finance. It also includes a response to the US’s executive order on cryptocurrency. The FSC plans to launch a crypto-insurance system as a backstop measure against cyber-attacks, system errors, and unauthorized transactions. Moreover, the crypto tax legislation would levy a 20% tax on crypto investment gains above about $2,100 per year.
A spokesperson for the FSC said taxation of investment income from virtual assets should be done after investor protections are in place. Simon Kim, the CEO of Hashed, highlighted that it doesn’t make sense to impose a tax on cryptocurrency before enacting relevant statutes. He believes that promoting taxation on cryptocurrency without profound research on the industry can raise serious issues. Kim said an investor protection system for digital assets is yet to be implemented.
The Singapore government, under President Yoon’s leadership, plans to establish the Digital Industry Promotion Agency. It will serve as a reference point for regulatory issues in the crypto industry.