Opposition to Crypto Tax Plans Gaining Momentum in South Korea

The South Korean government has seen a swell in opposition towards plans to levy taxes next year against cryptocurrency trading.

The proposed 20% tax on income earned through the trade has been touted as a means of “normalizing taxation” for transactions involving crypto assets.

But some advocates and investors have been petitioning the government over the past three months to allow deductions on earnings.

Three petitions so far have been filed to that effect with South Korea’s presidential Blue House. The latest one, which was filed this week, now also calls for the chairman of the Financial Services Commission to step down.

Eun Sung-soo came under fire for remarks he made this Thursday on the use and validity of these assets.

“No intrinsic value”

Speaking to lawmakers, he described cryptocurrency as “a crypto asset with no intrinsic value,” reiterating the government’s position on the matter.

He also drew comparisons between investments in art and cryptocurrencies, suggesting there were safer means of investing money. 

Those remarks were met with fierce opposition. The anonymous author of the latest petition accused the government of having “double standards” by limiting opportunities for the newer generations, while the older generations had ostensibly expanded their wealth with ease through avenues like real estate.  

Cracking down on financial crimes

Eun’s remarks followed an announcement by the government on Monday that it will be cracking down on financial crimes involving cryptocurrencies, including investment fraud and scams.

The government’s attempts to regulate the trade in cryptocurrencies saw authorities in Seoul seize digital assets of 676 individuals accused of tax evasion. 

As reported, they collectively owe the government around $25 million in overdue amounts. Also, they are among 1,556 entities that the government discovered were holding crypto across three crypto exchanges in the city. Starting next year, crypto exchanges will be mandated to hand in records of trades and transactions. 

Currently, virtual asset service providers are required, under amendments to anti-money laundering regulations, to “verify the identity of customers” and “report on suspicious transactions,” among other tasks. 

While the amendments were approved last month, regulators are looking to widen the scope even further as they mull stricter oversight of remittances related to price differences in bitcoin (BTC) traded on local exchanges and overseas ones.