The South Korean authorities have further postponed the implementation of its cryptocurrency taxation system for another two years. The government cited the devastating conditions that have plagued the markets of late as one reason, further highlighting the preparatory period required to fully enact suitable investor protection measures in the crypto space as a second reason.
South Koreans would see tax-free gains on crypto till January 1, 2025
The “2022 Tax Reform Bill,” which was expected to take effect on January 1, 2023, was suspended by the government, as a local news outlet reported. This implies that gains from investments in virtual assets would remain tax-free for South Korean residents for another two years, starting from January 1, 2023. Accordingly, the bill will be implemented on January 1, 2025.
The National Assembly of South Korea passed the Tax Reform Bill on December 2, 2021. Additional measures were incorporated into the bill on three different dates in the same month, and the bill was slated to take effect from January 1, 2022.
However, sometime in mid-January this year, the authorities thought it necessary to defer the enactment of the bill by one year from the date it was originally supposed to take effect. Consequently, investors expected taxes on crypto gains from January 1, 2023, instead. With these recent reports of further deferment, investors have another two years of tax-free crypto investments.
The Terra crash has made investor protection measures a necessity in South Korea
The South Korean government has not taken Terra’s collapse lightly, considering the fact that Terra’s CEO, Do Kwon, is a South Korean national. Following the crash of the crypto entity that saw investors lose their fortunes, the government decided to put measures in place to ensure that a similar event does not reoccur.
On June 1, the South Korean authorities revealed plans to form a “Digital Assets Committee,” which would oversee the crypto markets. The committee would oversee coin listing on exchanges, monitor unfair trading, and enact investor protection measures.
These measures are especially necessary because the crypto adoption rate in South Korea has tremendously surged over the years. NFTs are particularly very popular amongst South Koreans. In terms of crypto adoption rate, South Korea ranks 16th globally. Earlier this year, the South Korean government noted plans to pledge $187M to foster Metaverse growth in the country.