South Korea: Crypto Legislation to Induct Virtual Currencies into System Supervision

The latest update in South Korea’s crypto landscape saw the South Korean financial regulatory authorities propose legislative measures on virtual currencies by inducting it under system supervision like other financial industries, such as banking and insurance. Furthermore, the authorities have defined the rights and responsibilities of crypto assets, levying “undue profits” from crypto trading via unethical tools, as illegal. These tools include, market manipulation, as well as using undisclosed information to impact the prices. Henceforth, the authorities aim to treat it as an offense, with punishments starting from a minimum of one to five years in prison along with three to five times the fine.

South Korea Regulator’s Propose Criminal Penalties for Crypto Law Offenders

According to local news, the Financial Services Commission’s (FSC) November 23 report submitted with the National Assembly, proposed laws around crypto in reference to the Act on Protection of Cryptocurrency Users. Along with recommending the above mentioned punishments for defaulters, The FSC report also asserted that cryptocurrency issuers in South Korea must be bound to disclose white papers, coin evaluations, and business reports to users. Furthermore, failure to meet these laws will lead to criminal penalties.

The Financial Services Commission, together with the Political Affairs Committee decided to propose the utilization of its Business Rights Act for crypto regulation instead of amending the existing Specific Financial Information Act which was formerly used oversight in regards with AML in the crypto industry. The reason given by the authorities highlighted the issue of manifold loopholes as the former law regulated virtual currency only for the purpose of preventing money laundering.

South Korea Crypto Tax

Crypto Crackdown in South Korean has been a long-standing process. Last month, despite considerable backlash from the opposition, the South Korean Government confirmed the timeframe to begin crypto tax regulations in the country. The cryptocurrency taxation will be implemented on January 1 2022, which will impose a 20% tax on the profits of the transactions. While the government has consistently reaffirmed its crypto stance, the opposition continues to take pro-crypto measures. Following the crypto tax confirmation, The People Power Party drafted a proposal to tone down capital gain taxes on cryptocurrencies, however, South Korean authorities’ anti-crypto stance remains unshaken.