The Korea Times, a business focused media publication, reports that the South Korean government plans to reverse its decision on banning ICOs, allowing the sale of tokens under certain conditions which are yet to be finalized.
Last year, South Korean government banned all domestic ICOs without prior warning or notice. The move led to widespread panic selling of cryptocurrencies, which destabilized the crypto market in the country. Koreans were also barred from investing in local ICOs.
The move by the government prompted many blockchain-based startups to leave the country in search of countries with friendlier environment for cryptocurrencies, such as Switzerland and Estonia. The ban also led to massive criticism of the government from blockchain and cryptocurrency enthusiasts. South Korea is known as a major hub for innovation, being home to major global companies like Samsung, and the move was seen as a means to curtail citizens from being innovative.
Are ‘Certain Conditions’ Equivalent to Taxation?
Choe Heung-sik, Governor of the Financial Supervisory Service, told Bitcoinist that several government agencies and departments have been involved in consultations, and their recommendations will be made known soon. Choe said,
The financial authorities have been talking to the country’s tax agency, justice ministry and other relevant government offices about a plan to allow ICOs in Korea when certain conditions are met,
In the last few months, the South Korean government has expressed two main concerns with regards to cryptocurrency; anonymity and taxation. Already, measures have already been developed to prohibit anonymous accounts from cryptocurrency trading, where a large share of it is carried out using the Won, South Korea’s currency. Similarly, foreigners have been banned from trading on South Korean-based cryptocurrency exchanges.
However, the government is still haggling about the best way to introduce taxation in the cryptocurrency market without hurting the innovation involved in the industry. An anonymous source talking to the Korean Times indicated that the new conditions could mean the introduction of taxation in the crypto market.
Various scenarios such as the imposition of value-added tax, a capital gains tax, or both on trade; and the collection of corporate tax from local cryptocurrency exchanges, as well as the initiation of authorized exchanges with licenses are being discussed,
-Said the official.
A report in Bitcoinist quotes Choe Heung-sik, saying that the government is committed to allowing ICOs and investors to participate in token sales, but the government should be allowed to access data on capital inflows from both individual investors and retail traders in the ICO market. This is a sign that taxation will be introduced in the cryptocurrency market.
The regulation of ICOs in South Korea will spur a new wave of investors in the cryptocurrency market, while at the same time allowing blockchain-based companies and ICOs to operate under clear rules and regulations without any unnecessary confrontations with the regulator, while also allowing the government to earn revenue from taxation.
What’s your take on the new regulations? Are they necessary for the growth of crypto industry? Share your thoughts in the comments section.