South Korea: Gov't Seeks to Tax Crypto Transactions as Capital Gains

The South Korean government plans to tax capital gains on cryptocurrency transactions.

In parallel, the Korean National Assembly is in the process of advancing a related bill aimed at increasing transparency in cryptocurrency trading.

While the government's capital gains bill will reportedly go ahead regardless of related legislation, The Korea Times notes that a more adequate definition of cryptocurrencies and digital assets will be required to provide clarity for the government's interventions.

Among the matters to be clarified is the question of whether crypto-related gains are to be deemed similar to gains in stock trading or real estate transactions.

To implement its taxation plans, the government could therefore need to obtain access to trading records on cryptocurrency exchanges - a practice already underway in countries such as the United States.

As Cointelegraph reported, South Korea's proposed Act on Reporting and Use of Certain Financial Transaction Information will, if passed, stipulate that banks must issue real-name accounts to crypto exchanges.

This would ensure that crypto exchanges adhere to the same Know Your Customer and Anti-Money Laundering standards as traditional financial institutions.

This move to bring cryptocurrency exchanges under the direct regulation of the country's watchdog, the Financial Services Commission, will also include introducing a crypto exchange licensing system, as recommended by the Financial Action Task Force.

Major South Korean exchange Upbit, which is run by a subsidiary of Korean tech giant Kakao, revealed last month that 342,000 Ether had been stolen from its hot wallets.

The thefts happened when the exchange was allegedly moving assets between its hot and cold storage facilities, sparking some speculation that the incident may have been an inside job, rather than an external breach.