Government considers tax on cryptocurrencies

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Government considers tax on cryptocurrencies

Korea is considering taxes on cryptocurrency transactions as part of efforts to curb excessive speculation in virtual coins, the country’s finance minister said Thursday.

“We are reviewing [taxation] because [cryptocurrency] is seen to be taxable,” Kim Dong-yeon told lawmakers. “We are looking at a variety of cases in other countries.”

The finance minister also stressed that cryptocurrencies are not legal tender, adding that the government will roll out a set of measures to curb the “irrational” investment craze.

Kim had previously said in a radio interview that a shutdown of cryptocurrency exchanges was one of the government’s options.

Financial authorities have banned a system where banks issued corporate accounts to cryptocurrency exchanges, which then in turn issued anonymous accounts to their customers for cryptocurrency trading.

Banks are now required to directly issue cryptocurrency accounts to customers who have gone through identity verification, and cryptocurrency exchanges have to share information about all transactions with banks. As a tax enforcement measure, the government can access this data.

Korea’s financial authorities have been stepping up their monitoring of cryptocurrency transactions amid concerns that a bubble may be set to burst. Commodities like bitcoin and ethereum have rapidly gained popularity in recent years among Korean investors hoping to make a quick buck.

Korea is home to one of the world’s biggest private bitcoin exchanges, with millions of people estimated to own stock in the cryptocurrency. However, the exchanges go largely unregulated because the government does not recognize cryptocurrencies as financial products and has no rules to protect investors. YONHAP
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