The government of Korea is preparing its legal mechanisms to levy taxes on capital gains crypto-asset proceeds. The new legislation, which targets digital asset deals, is set to take place from 2020.
Korea to Tax Crypto Capital Gains
As reported by the Korean Times, Korea has been one of the most active grounds for crypto speculation. However, there was no established framework to tax capital gains from the sale of crypto assets. As circumstances stand, the Ministry of Economy and Finance is preparing to build the measure that will become a tax bill from 2020.
“Related discussions have been taking place. The revised bill will be drawn up by the first half of next year,” said an official from the Economic Ministry.
The Korean parliament has also been preparing a crypto taxation bill. The resultant bill aims to enhance transparency on all sections of the process involving crypto trading. Even so, it’s now official that Korea will start taxing capital gains from the sale of crypto assets.
If the new legislation follows the universal approach to taxing capital gains, the residents of Korea would have to give a detailed history of their crypto trading deals. Besides, cryptocurrency exchanges would have to keep detailed personal information of each user, as well as a separate record.
Anonymous Trading No Longer in Place
Currently, most crypto exchanges already apply a KYC procedure for each trading they process. Korean traders also link their accounts to bank accounts so they trade directly in the Korean national currency (Korean won). However, outside decentralized exchanges or unclear markets, it’s nearly impossible to trade secretly in 2019.
Once implemented, the new move to tax Bitcoin and other cryptocurrencies is expected to dim the spirit of cryptocurrencies, which are supposed to exist independently with no control from the government. However, the sale of digital assets generates fiat gains and therefore considered taxable. Importantly, the idea of collecting transaction-related data and crypto ownership information is seen as government mechanisms in trying to control Bitcoin.
The only reason more people aren’t using Bitcoin as money is because our overlords want to tax and surveil every single transaction you ever make.
— Ryan Selkis (@twobitidiot) December 7, 2019
While Bitcoin remains active and one of the chief sources of gains in 2019, Korean interest in crypto trading has waned in 2019. The diminishing trend was partly due to the decreased activity of altcoin markets.
Korea now joins the league of countries that have vowed to track and tax crypto transactions and trading, in the footsteps of the U.S. IRS and other governments.