As the Seoul-based administration prepares to usher in a new finance minister – Hong Nam-ki – the former lead policy-maker under President Moon Jae-in has suggested he is keen to see the National Assembly tighten the taxation screw on South Korea’s huge cryptocurreny industry. Ministers in the tech-savvy country have been casting a careful eye over the nation’s thriving blockchain and cryptocurrency scene which is estimated to be worth around $100billion – a figure that government leaders are desperately attempting to cash in on. Answering questions about his intended policies, the incoming Hong said that he would set out a taxation infrastructure that would exclude ICOs and cryptocurrencies from the benefit-heavy category of ‘start-up’ businesses, thus paving the way to increase taxation. He said: “The exclusion reflected the criticism that crypto exchanges were vulnerable to illegal acts and were merely a brokerage service separate from blockchain technology.”
The switch of mood from allowing crypto businesses to thrive in South Korea with tax breaks and incentives comes at the end of a two-year spell of building financial infrastructure around the growing industry.
Backing from several large multi-nationals based in Seoul, coupled with huge investment from the republic’s banks has seen exchanges, coins and ICOs grow steadily to turn South Korea into one of the world’s leading crypto hubs.
However, it would now appear that government ministers want to see a return on the nation’s investment – a move which other nations will be observing.
Here in the UK, the HMRC is currently gearing up to deliver fresh tax guidance in connection with crypto assets in anticipation of mass adoption and discussion around potential regulation next year.
It is estimated that, in light of Nasdaq’s announcement to list Bitcoin Futures on the exchange in the first quarter of 2019, the use of bitcoin will become more widespread in the UK – a move that would generate a raft of new and taxable assets.
A HMRC spokesman said: “We tax crypto assets in accordance with the rules, and the tax treatment will depend on the activities and the parties involved.
“Each case will be considered on the basis of its own facts and circumstances.
“HMRC will shortly be publishing detailed guidance on the taxation of crypto assets for individuals.”