South Korea, one of the largest markets for digital assets, is planning to tax cryptocurrency profits starting next year, The Korea Times reported on Sunday. The country’s Ministry of Economy and Finance confirmed that it is lobbying for the proposed laws to go into effect in the Q1 2020.
A ministry official said that discussions have already taken place and a revised bill is expected to be tabled next year.
The project aims to build a trading platform and is supported, among others by billionaire VC fund Tim Draper.
“Related discussions have been taking place. The revised bill will be drawn up by the first half of next year.”
South Korea is the third-biggest market for bitcoin trading. Such developments are expected to have an impact on the price of the leading digital asset. At the time of writing, Bitcoin is down 2 percent in the last 24 hours, according to TradingView data.
South Korea and cryptocurrency tax
Before the legislation can be passed, the Asian country needs to give a more precise definition of cryptocurrencies. The bill will also need to classify if the cryptocurrency profits need to be treated in the same manner as profits from stock market trading or as income from property transactions.
At the same time, South Korea will need to act in line with other countries that obtain trading data from cryptocurrency exchanges to levy taxes properly.
The South Korean government is working on a bill aimed at increasing transparency in cryptocurrency transactions and also adhere to international anti-money laundering recommendations.
The new bill will require traders to use their real-names and cryptocurrency exchanges will be under the regulation of the Financial Services Commission’s Financial Information Analysis Institute. Should this bill be passed into law, it will only come into effect a year later.
In January last year, 66 crypto stakeholders including 25 exchanges came together to form the Korea Blockchain Association, a self-regulatory board with the mandate to police the local industry.
Several countries are yet to offer comprehensive regulation on cryptocurrency trading and taxation. Portugal won the hearts of crypto enthusiasts when it declared that the buying and selling of virtual currencies will not be taxed.