South Korea’s plans for regulating cryptocurrencies like bitcoin may include banning anonymous bank accounts, mandating that operators exchange their data with banks to use the currency and introducing a 24 percent tax on cryptocurrency exchanges, according to South Korea media reports.
The country announced plans earlier this month to tax cryptocurrency exchanges with a 22 percent corporate tax rate and a 2.2 percent local income tax rate, in line with other South Korean corporations with an annual income of more than $18.7 million, according to Yonhap News.
The move is expected to help the government catch up with the widespread use of ethereum, bitcoin and other cryptocurrencies, which have grown exponentially in South Korea. The country is currently the third-largest cryptocurrency market in the world behind Japan and the United States.
Multiple media reports also reported that the country will prevent anonymous cryptocurrency banking. The Financial Services Commission announced that the Korea Financial Intelligence Unit was attempting to develop guidelines for South Korea in order to “prevent cryptocurrency-related money laundering,” according to CNBC, but denied looking into “any measure to monitor cryptocurrency users’ transaction data.”
The Seoul government walked back statements made earlier this month suggesting that it would consider outright banning cryptocurrencies after receiving widespread backlash, according to CNBC. Kim Dong-yeon, finance minister, clarified that Justice Minister Park Sang-ki’s statement regarding a ban was “a proposal,” which requires more coordination to work out.
In December, Prime Minister Lee Nak-yeon suggested cryptocurrencies could damage the social psyche of Korean youth and cause “social pathological phenomenon,” according to SCMP, and two major South Korean banks are no longer going to redeem credit card coins for bitcoin.
However, despite the government’s mixed messages regarding ethereum price and signals that major financial platforms in the country are pulling out of the field, investors continue to search for opportunities to expand cryptocurrency use in the country. The China-based cryptocurrency platform OKCoin is preparing to launch in South Korea as early as February, according to the Wall Street Journal.
Samsung announced plans to use blockchain to track orders, and Kakao is preparing to launch another cryptocurrency exchange by the end of the year, suggesting business is not slowing down.