South Korea’s Governing Party Pursues Postponement of Cryptocurrency Tax in Line with Election Commitment

The ruling People Power Party of South Korea is pushing for a two-year delay in the taxation of profits from cryptocurrency investments.

This initiative is perceived as a possible campaign commitment for the forthcoming general election set for April.

The party’s objective is to focus on creating a thorough regulatory framework for cryptocurrencies prior to enacting tax measures.

South Korea’s Ruling Party to Propose New Regulations

As reported by local media outlet Herald Business Daily, the right-leaning party plans to introduce a new set of regulations concerning the crypto sector in the next term.

By prioritizing regulatory actions, the party seeks to postpone the enforcement of the crypto gains tax, which is currently scheduled to commence in January 2025.

This suggested delay would shift the tax implementation to 2027.

As part of its electoral strategy, the ruling party is contemplating the introduction of a bill that includes key components for potential crypto regulations.

These regulations could encompass requirements for crypto custody providers and criteria for token listings.

If enacted, these regulations would complement South Korea’s initial framework of crypto regulations set to take effect in July.

The People Power Party intends to finalize its primary election commitments by the end of the month.

In a recent update, a representative from South Korea’s Ministry of Economy and Finance indicated that the legislative body should consider the possibility of eliminating income tax on crypto assets.

This proposal aligns with the current administration’s effort to eliminate the planned tax on financial investments, including stocks and funds.

However, the People Power Party does not appear to be pursuing a complete removal of the proposed cryptocurrency taxation, as reported by Herald.

In addition to advocating for a tax postponement, the party also seeks to align the cryptocurrency tax threshold with that of stocks.

At present, the tax plan imposes a 22% tax rate on crypto gains exceeding 2.5 million Korean won (approximately $1,875).

In comparison, gains from stocks are taxed only when they exceed 50 million won.

South Korea to Mandate Officials Disclose Crypto Holdings

In December of the previous year, South Korea declared that senior public officials will be required to disclose their cryptocurrency holdings starting next year.

At that time, the country’s personnel ministry stated that this proactive measure was aimed at mitigating potential conflicts of interest and fostering integrity within the public sector.

By enforcing the disclosure of cryptocurrency holdings, the government seeks to ensure that public officials uphold the highest ethical standards and avoid any potential conflicts that may arise from their participation in the crypto market.

This requirement will apply to high-ranking officials across various government agencies and departments.

These officials will be required to report their cryptocurrency holdings, including specifics of the assets they possess and the corresponding amounts.

Meanwhile, Lee Bok-hyun, the head of South Korea’s Financial Supervisory Service, plans to visit the United States later to discuss the crypto industry with U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler.

Specifically, the official is scheduled to converse with Gensler regarding spot Bitcoin ETFs.

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