As the general election in South Korea draws near, political factions are intensifying their efforts to court support from the burgeoning community of crypto investors, recognizing their growing influence as a pivotal voting bloc.
Reported by the local media outlet JoongAng Daily, these parties are acknowledging the importance of formulating policies pertaining to cryptocurrencies, given the burgeoning interest in this burgeoning sector. Notably, South Korea is witnessing a surge in the participation of crypto investor groups in the electoral process.
Amidst the public’s fascination with the remarkable surge in Bitcoin’s value, currently trading at 92.1 million won ($68,654) on Upbit, the nation’s leading cryptocurrency exchange, attention has been drawn to this dynamic market. Despite experiencing a slight dip from its recent peak of 105 million won, Bitcoin’s current value reflects a notable increase of over 60% since the beginning of the year.
Both political parties have unveiled their respective policies on cryptocurrencies.
Both South Korea’s conservative People Power Party (PPP), aligned with the Yoon Suk Yeol administration, and its rival Democratic Party (DP) have rolled out their respective policy proposals regarding the institutionalization of crypto-assets, each with distinct approaches.
The PPP, through its policy pledges released on Monday, commits to extending the tax deferral on crypto-assets, which was initially set to expire in January 2022. Originally, a 20% taxation rate on investment gains exceeding 2.5 million won was scheduled to be implemented in January 2022, but it has been postponed twice. Additionally, the PPP plans to introduce supplementary legislation aimed at bolstering investor protection measures and establishing a dedicated committee tasked with overseeing the industry and safeguarding investors. Moreover, they aim to institute standardized regulations for regulatory filings by crypto exchanges.
Conversely, the liberal DP presents a more progressive stance on cryptocurrencies. In February, they unveiled their proposal to greenlight the issuance, listing, and trading of cryptocurrency-backed exchange-traded funds (ETFs). The DP also pledges to raise the deduction limit for capital gains from crypto-asset investments to 50 million won, up from the current 2.5 million won. Furthermore, they promise to prohibit crypto trading by lawmakers while parliament is in session, following the resignation of Representative Kim Nam-kuk, who left the party amidst controversy surrounding his cryptocurrency transactions.
However, the finer details of these policies are still pending refinement. President Yoon’s recent commitment to abolish the planned capital gains tax on stock investment gains, slated to come into effect in 2025, raises concerns about potential disparities in tax treatment concerning gains from crypto-asset investments, which could influence voting decisions.
Spot ETFs Might Get Approval in South Korea
Earlier this month, there emerged discussions within South Korea’s financial regulatory landscape concerning the potential green light for spot Bitcoin exchange-traded funds (ETFs) in the nation. Lee Bok-hyun, the governor overseeing the Financial Supervisory Service, addressed this topic during a recent radio interview, shedding light on the differing viewpoints prevalent among regulatory authorities.
Lee emphasized the existence of a spectrum of opinions within the regulatory sphere. While he himself maintains an optimistic outlook toward virtual assets, acknowledging their potential, others exercise a more cautious approach, harboring reservations about their implications and risks. In navigating this landscape, Lee underscored the importance of thoroughly deliberating on all perspectives, advocating for comprehensive internal discussions to weigh the benefits and risks associated with such a decision.
As of the present moment, South Korean crypto investors do not have access to spot Bitcoin ETFs. This revelation follows the country’s financial authorities announcing in January their stance of not intending to regulate the trading of Bitcoin futures ETFs. This regulatory stance underscores the ongoing evolution and deliberation within South Korea’s financial regulatory framework regarding the incorporation of cryptocurrency-based financial instruments.
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