A South Korean digital asset trading taxation might usher in a new era of legalizing cryptocurrencies. Imposing taxes on the asset class trading is a surefire signal that the government has bowed to pressure from local crypto users. The last two years have seen the authorities oppose crypto trading but things are looking bright.
South Korean crypto regulations are very clear. This makes it possible to explore digital asset taxation just like in the real estate sector. The government is planning to invest in the blockchain technology to the tune of $400 million.
South Korea Central bank support for digital asset trading taxation
The South Korean Central Bank appears to have developed a soft stance on crypto. It is working on a ten-year blueprint than will see increased adoption of distributed ledger technologies (DLTs) and the development of digital currencies. This is a move seen by observers as a step towards making crypto trading legal.
As per a recent report published on News Asia, South Korea is about to introduce capital gains on digital asset trading starting next year. The report compares crypto trading with real estate saying both have a transferable value that can be taxed. Imposing a tax on crypto means the asset class is likely to be legalized.
To achieve a foolproof digital asset trading taxation level, exchanges will have to be involved. Crypto exchanges will have to provide authentic transaction details to enable the government to work out user capital gains
Complex digital asset trading taxation
South Korea appears to be following the U.S. crypto taxation route which has proved complex. Capturing the actual crypto profits and losses is a nightmare. Separating crypto trading and normal transactions is not an easy task and this could slow down South Korea’s quest to tap into the lucrative crypto trading.
Cryptocurrency exchange reporting has never been accurate and a huge percentage of crypto goers do not use their real names and identities. With many hurdles on the way, the digital asset trading taxation plan might take a while and once it does, a News Asia reader says:
It looks like from next year, we will see larger institutions being able to actually engage in crypto activities legally.
Making crypto trading legitimate in South Korea will however spur the local crypto market. There is increased activity around blockchain and crypto in the country. Recognizing the role of blockchain-backed digital assets is a clear cut boost for the local economy.
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