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How the new South Korean administration is transforming the country's crypto industry

Updated: Jul 25, 2024
Published: May 5, 2022
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The crypto industry has continuously viewed South Korea as a country with overly strict regulations. Still, South Korean President-elect Yoon Suk yeol's administration has recognized the opportunity that the country is passing up.

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Lifting the ban on ICOs

Initial coin offerings (ICOs) have been illegal in South Korea since September 2017, and South Korean companies are prohibited from making direct investments in virtual assets. This has slowed much of the country's crypto industry innovation, but this appears to be changing as the right-wing government recently approved initial coin offerings (ICOs) to its list of 110 national tasks.

Yoon's administration included a plan to draft legislation called the Digital Asset Basic Act, including guidelines for issuing digital assets like non-fungible tokens (NFTs), protecting investors, and stabilizing digital transactions. The presidential transition committee also stated that a crypto asset tax would be considered after investor protection legislation.

The controversial crypto tax

The crypto tax in South Korea was supposed to go into effect in the fiscal year 2022, but the new administration pushed it back to 2023. The crypto tax legislation would impose a 20% tax on crypto investment gains exceeding $2,100 per year, making it one of the most controversial changes in the country.

Another critical consideration is that South Korea has only four won-to-crypto exchanges, allowing it to monopolize the domestic crypto industry. However, the Korea Federation of Banks (KFB) has allegedly asked South Korea's new presidential administration to enable local banks to handle cryptocurrency.

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