The South Korean government plans to tax capital gains on cryptocurrency transactions. A Dec. 9 report from The Korea Times reveals that a revised bill to introduce the measure will be drawn up by the country’s Ministry of Economy and Finance by the first half of 2020.
In parallel, the Korean National Assembly is in the process of advancing a related bill aimed at increasing transparency in cryptocurrency trading. If passed, the new regulations would come into effect one year after the Assembly’s plenary session.
While the government’s capital gains bill will reportedly go ahead regardless of related legislation, The Korea Times notes that a more adequate definition of cryptocurrencies and digital assets will be required to provide clarity for the government’s interventions.
Among the matters to be clarified is the question of whether crypto-related gains are to be deemed similar to gains in stock trading or real estate transactions.
To implement its taxation plans, the government could therefore need to obtain access to trading records on cryptocurrency exchanges — a practice already underway in countries such as the United States.
Anti-Money Laundering measures
South Korea’s proposed Act on Reporting and Use of Certain Financial Transaction Information will, if passed, stipulate that banks must issue real-name accounts to crypto exchanges. This would ensure that crypto exchanges adhere to the same Know Your Customer and Anti-Money Laundering standards as traditional financial institutions.
This move to bring cryptocurrency exchanges under the direct regulation of the country’s watchdog, the Financial Services Commission, will also include introducing a crypto exchange licensing system, as recommended by the Financial Action Task Force (FATF).
The thefts happened when the exchange was allegedly moving assets between its hot and cold storage facilities, sparking some speculation that the incident may have been an inside job, rather than an external breach. Upbit has pledged to reimburse those affected from its corporate funds.
Transfers of the ill-gotten assets have since been detected on the Ethereum blockchain.