Starting on the 1st of January, 2022, South Korea will enact a crushing 20% taxation on profits made by cryptocurrencies. The Korean Herald reported on Monday that this taxation, according to the nation’s Ministry of Economy and Finance, will be implemented in holding as well as trading in cryptocurrencies.
Pushing For Earlier Taxation
The tax itself will only come into effect once users gained a profit greater than 2.5 million Korean Won. Crunching the numbers, this means that the first $2,300 in crypto profits for Korea’s citizens is tax-exempt. From there, things get expensive, and quickly at that.
South Korea has long since been trying to push crypto taxation within the country at large, since it’s a crypto hub all in its own right. Initially, the plan was to implement crypto taxation as early as 2020, but thanks to the efforts of lobbyists and enthusiasts of the crypto space, the Korean government delayed that numerous of times.
Having An Inexplicable Change Of Heart
From there, a hard date was set for 2022, but then got delayed to 2023. Now, however, it seems that Korea’s government has decided that it should happen sooner, fast-tracking it for January 2022.
This comes after Korea officially recognized cryptocurrencies as financial assets, which doesn’t hold the same tax exemption as hobbies do. This fast-tracking of the taxation has most definitely nothing to do with the absolute insanity that is Bitcoin’s bull run happening during this time, probably.
Another important distinction stipulated by the Korean government is that cryptocurrencies either received as gifts or given by inheritance are also taxable. The Herald explained that these sorts of events will see the average daily price of the asset be calculated through one month prior and one month after the inheritance or gift as given to the receiver.
The Inevitable Backlash
As one would imagine, not a lot of Korean citizens were particularly happy with the idea of forking over a fifth of their profits. More than 38,000 citizens had already signed a petition denouncing this taxation since the 10th of February. Should Korea’s people manage to gather 200,000 signatures before the end of March, Korea’s government will be mandated to give a response about the matter.
Another important event happening in March is the revision to the Specific Financial Transactions Act. This is expected to result in South Korea’s crypto exchanges falling under a new level of regulatory scrutiny.
These new regulations will, as expected, strengthen the anti-money laundering and information security procedures. Alongside this, it’s expected that exchanges will be mandated to implement so-called “Real Name Accounts” to their users.