South Korea Plans To Tax Cryptocurrencies And ICOs, Says Incoming Finance Minister
Hong Nam-ki, South Korea’s incoming finance minister, said that the government is planning to tax cryptocurrencies and initial coin offerings (ICO).
In a written statement submitted to the National Assembly for his confirmation hearing, Hong said that the taxation plan would be finalized in accordance with the creation and progress of the taxation infrastructure and the trend on international discussions.
“We are preparing taxation plans by reviewing cases of foreign taxation through a task force, composed of relevant [governmental departments] and private experts, for proper taxation on virtual currencies,” said Hong. “It is desirable to confirm the concrete taxation plan by taking a detailed look [at the market].”
According to Hong, cryptocurrencies are a new phenomenon and so there is no internationally agreed regulatory framework. He added that there are such lingering problems like the market overheating and investor protection, which is why regulators need to be careful in building the regulatory framework.
Regarding ICOs, which are banned in the country, Hong said it is necessary to take a careful approach, considering the market situation, international trends and customer protection problems.
“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,” he said.
In August of this year, South Korea’s Ministry of Small and medium-sized enterprises (SME) and Startups (MSS) excluded cryptocurrency exchanges from legislation governing venture businesses. Hong justified the move stating that the exclusion reflected the criticism that crypto exchanges were vulnerable to illegal acts and were merely a 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,” Hong said.