SEOUL — The election victory of Yoon Suk-yeol, a prosecutor-turned-politician for South Korea’s conservative opposition party, has raised hopes for policy changes in a country where regulators are still hesitant to officially recognize digital money or virtual currencies as a general means of trading like stocks.
Yoon expressed his willingness to foster the digital asset market by enacting a new law governing transactions in the virtual currency market in South Korea. which has been dogged by fraud, cyberattacks and other illegal activities. Regulators maintained strict measures to prevent irrational and excessive speculative investments.
“I will support technology development and preemptively revise institutional foundations for the emergence of various forms of new digital asset concepts,” Yoon said during his tour. “There will be a policy shift towards a negative regulatory system so that private autonomy and creativity can be fully exercised without worrying about regulations.”
Yoon’s conservative People Power party is pushing for a new law that would include clauses protecting investors by recouping all profits from unfair dealings such as market price manipulation through legal proceedings and expanding an insurance system in case of hacking or system errors.
Yoon’s party supports taxing cryptocurrency income as digital asset income despite ongoing controversy over whether cryptocurrency transactions are genuine income subject to tax payment . Digital currency is a decentralized digital asset that can be exchanged between users through peer-to-peer transactions. The digital money market operates on a decentralized blockchain, which means that no central authority holds the transaction records stored on each cryptocurrency owner’s computer.
If virtual currencies are included in the scope of capital gains, the reference price must also be determined in addition to receiving all virtual asset transactions from each exchange to secure tax proofs. Discussions are ongoing in Parliament on how to lay the groundwork for promoting specialized financial institutions that link digital asset transaction accounts to banks.
Currently, virtual money changers can only provide won transaction services when they receive real-name deposit and withdrawal checking accounts from banks. In the event of money laundering, the stock exchange and the banks must jointly assume their responsibilities.
The Korean Association of Digital Asset Service Providers (KDA) has urged the next government to put in place measures that can create a strong ecosystem and protect investors in the cryptocurrency industry. Cryptocurrency exchanges advocate clear guidelines on systems like the initial coin offering (ICO), which is a crowdfunding way to raise capital for startups. Crowdfunded cryptocurrency is sold to investors in the form of “tokens” which are meant to become functional units of currency.
Yoon, who will take office in May, promised a tax exemption of up to 50 million won ($40,290) on investment returns from virtual assets and allowing ICOs to attract more investors to the e-commerce market. virtual assets. There has been no clear response from the ruling Democratic Party of President Moon Jae-in, who controls a majority of 172 parliamentary seats far ahead of the 110 seats held by Yoon’s party.
“The expansion of the coin income tax exemption and the authorization of ICOs are positive for virtual asset businesses, but they must be combined with policies to regulate indiscriminate ICOs” , said Choi Yoo-joon, researcher at Shinhan Investment.
Korea Securities Depository, a public body that provides central custody of securities, book-entry transfer and settlement of securities transactions, has promised to develop a roadmap for security token offering (STO) based on the blockchain which can tokenize and trade stocks and bonds as well as real estate and works of art, unlike ICOs which do not have a real asset base.
“We will prepare a roadmap for security token offering and establish a distribution platform so that innovative financial services based on blockchain technology can make soft landings,” said KSD Director, Rhee Myong-ho, at a press conference in February.
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