South Korea is planning to tax cryptocurrencies and initial coin offerings [ICOs], in spite of the absence of a regulatory framework. South Korean finance minister nominee, Hong Nam-ki, informed the public of this development through a local media outlet called The Korea Times.
The news comes at a time when Ohio has allowed its citizens to pay tax bills through popular cryptocurrency Bitcoin. However, the government of South Korea does not seem to be on the same page as Ohio.
The nominee had submitted written answers to the South Korean National Assembly in response to a question based on taxation of digital currency. He further added that the tax system for digital currencies will be finalized along with the taxation infrastructure and advancement by global stakeholders. Nam-ki said:
“A task force consisting of experts from relevant government agencies, including the National Tax Service and the private sector, will be formed to examine overseas examples and hammer out the taxation plan.”
Nam-ki defined cryptocurrency as “electronic signs of values issued privately” instead of central banks and financial institution. The finance minister nominee noted that about 2,000 cryptocurrencies were traded globally and 160 domestically.
He stated in his letter that since cryptocurrencies are still in its nascent stage, it does not have a regulatory framework of its own. There are problems like overheating of the market and investor protections that need to be considered while forming a regulatory framework, added the minister.
Nam-ki also commented on the banned ICOs in Korea and said that allowing banned ICOs will be considered after observing market conditions, international trends, and investor protection issues.
The finance minister nominee said that the policy orientation on the ICO will be determined with appropriate agencies after taking into consideration the results of the financial regulator’s market survey and after receiving the feedback from experts.
Nam-ki acknowledged the government’s exclusion of cryptocurrency exchanges and said that the reason behind the exclusion remained that the exchanges were prone to illegal acts and are just brokerage service separate from blockchain technology.
“We will do our utmost to nurture blockchain technology as nine out of the 10 business types classified as blockchain-related businesses by Statistics Korea, excluding the crypto exchanges can be still acknowledged as venture companies.”
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