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South Korea's bitcoin tax policy short-term hopeless, or follow the example of Japan

Earlier in the week, South Korean Deputy Prime Minister and Minister of Strategy and Finance Kim Dong-yeon revealed that the South Korean government is studying ways to better regulate the local bitcoin market and levy the corresponding Taxes and fees.

Although the South Korean government and local financial regulators are actively discussing the possibility of implementing a tax on bitcoins, at a press conference, Deputy Prime Minister Kim indicated that the South Korean government does not intend to introduce bitcoin tax in the 2018 tax law amendment policy.

South Korea may follow Japan's tax policy

Since the beginning of this year, the South Korean government has introduced a lighter regulatory framework for bitcoin commerce and investment that is structurally similar to that set by the Japanese government and the Japan Financial Services Agency (FSA).

At present, the cryptocurrency exchange and trading platform in these two regions are relatively free and government intervention and supervision are relatively small.

It is learned that in order to promote the growth of the cryptocurrency market, the government canceled its 8% excise tax on Bitcoin as stipulated in July in order to maintain the rapid growth rate of the Japanese bitcoin industry and the growing demand intention from the traditional financial industry.

Given that the regulatory framework provided by the financial authorities in Korea is largely similar to Japan's regulatory framework, the South Korean government may implement Bitcoin tax policies similar to those in Japan.

Discussion on the centralization of transactions

Some agencies, the Bitcoin community and South Korean government officials expressed concern about the centralization of Bitcoin transactions in South Korea. Bithumb, South Korea's largest cryptocurrency exchange, currently accounts for 70% of Korea's bitcoin market.

Currently, South Korea's Ministry of Education and Ministry of Finance are exploring potential ways of diversifying cryptocurrencies and bitcoin transactions.

The bank is testing bitcoin

In addition, some of the largest and most influential financial institutions in Korea, such as Shinhan Bank and Korea's second largest commercial bank, have begun testing Bitcoin wallet and vault systems to provide security for Bitcoin users.

As Bithumb is seen twice this year, Shinhan Bank underlines the importance of vault services to Bitcoin users, especially large investment companies and institutional investors.

However, it is also important to consider the structure and decentralization of Bitcoin networks. Because Bitcoin networks exist on peer-to-peer protocols, the safest way to store bitcoins is through the unmanaged wallet platform, so users have absolute control over their private keys and their funds.

Overall, the South Korean government has begun to recognize the rapid growth of the Bitcoin market and has drafted some solutions for the standardization of the Korean Bitcoin industry, all of which are very positive developments.