Bitcoin Taxation: Will China and Japan co-operate with South Korea on Bitcoin?

In the light of the strained relationship between China and South Korea, it’s hard to come to a conclusion regarding this question. Since 1950, when China sent its army to fight against South Korea in Korean War, the relation between both the countries soured. Though, through trade treaties and for mutual gains, China and South Korea, both are trying to better their relationships.

Proposition by South Korea on Bitcoin Taxation

For quite a time, China has been pushing on stringent regulations on bitcoin. The Government has been pushing for bitcoin taxation on exchanges and bitcoin miners. Now, the South Korean government is making the announcements of the possibilities of taxations on bitcoin along with other cryptocurrencies, under the current tax system.

At a recent meeting of the National Economic Advisory Council, that was presided over by the President Moon Jae-in, there has been a quotation said by an official:

“Countermeasures against the difficulty of tracking tax revenue are also necessary. There is a need to regulate brokers who mediate virtual currency transactions such as exchanges and accumulate taxation information.”

Now, the question to ponder over is how many taxes the South Korean government is going to impose on cryptocurrencies.

Korea is world’s third largest cryptocurrency market in the world and its government is now trying to regulate the rampant speculation around it.

As said by the government in a statement:

“The government had warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility,”

Prime Minister Lee Nak-yeon added that

cryptocurrencies could “lead to some serious distorted or pathological phenomenon.”

Following this taxation announcement, South Korean regulators are seeking cooperation from their counterparts namely Tokyo and Beijing to address the speculation around cryptocurrencies.

South Korea’s Cooperation Strategy on Bitcoin

The Financial Services Commission of South Korea will go with a trial and error approach. In order to curb the speculative transactions, they will deepen their cooperation with China and Japan. As per FSC’s Chairman Choi Jong-Ku, the ideas regarding the regulations have already been exchanged among the Deputy finance ministers of Asian countries.

Choi has been heard educating the reporter with:  

“A virtual currency only triggers side effects”.

He also mentioned a list of these side effects namely, illegal fundraising, manipulation of market prices, speculation, hacking, and fraud. As per Choi Jong-Ku, the trial and error can help them in implementing the regulation on cryptocurrency.

Demographic Advantage to South Korea

The growing popularity of bitcoin in South Korea has no definitive explanation but it has been pointed by the local analysts that the mix of cultural and geopolitical factors may play important roles here. Moreover, it has been also believed that the political turmoil at home could be another big reason for the appeal to cryptocurrency.

The rise in the size of the South Korea cryptocurrency market, the need for regulations only becomes more essential. Do you agree?

Do you think China will team up with South Korea to succeed in following a common approach to regulating cryptocurrencies?

Let us know your thoughts in the comments below or write to us at hello@coingape.com

The presented content may include personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for you personal financial loss.