The government of South Korea is reportedly planning on taxing initial coin offerings (ICOs) and cryptocurrencies, according to a document submitted by finance minister nominee Hong Nam-ki.
The incoming taxation plan came in a written answer submitted to the country’s National Assembly, and in it, Hong claimed it would be finalized according to the creation and progress of taxation infrastructure, and according to international discussion surrounding the topic.
Per his words, a task force “consisting of experts from relevant government agencies including the National Tax Service and the private sector” will be formed to examine crypto taxation examples and create a taxation plan.
In the written answer Hong defined cryptocurrencies as “electronic signs of values” that are issued privately and not by central banks or other financial institutions. He noted there are about 2,000 cryptocurrencies being traded throughout the world, 160 of which are present in South Korean exchanges.
Cryptocurrencies are a new phenomenon and so there is no internationally agreed regulatory framework. Furthermore, there are such lingering problems as the market overheating and investor protection. Therefore, we need to be careful in building the regulatory framework.
Addressing ICOs, which are currently banned in the country, Hong revealed these would be carefully considered as market conditions are set to be monitored, as well as “international trends and investor protection issues.” He was quoted as saying:
We will determine our policy orientations on ICOs with relevant agencies after reviewing the results of the financial regulator's market survey and getting feedback from experts.
As for the government excluding cryptocurrency exchanges from being categorized as start-ups, he noted this decision reflected criticism surrounding cryptocurrency exchanges’ security issues and potential to be used for illicit activities. He added these were “merely a brokerage service” separate from blockchain tech.
According to local reports, the finance minister nominee noted the government will do what it can to “nurture blockchain technology” as, per his words, nine out of 10 business types are “classified as blockchain-related businesses by Statistics Korea.”
As CryptoGlobe covered South Korea has been looking for more cooperation from other nations on regulating cryptocurrencies. The government’s involvement in the nascent industry has seen it crackdown on unauthorized crypto exchanges, forcing some to shut down.