Ahead of the upcoming national elections in South Korea, both the ruling People Power Party and the opposition Democratic Party are making promises related to cryptocurrency regulation and taxation. The People Power Party has outlined several pledges, including plans to allow spot bitcoin exchange-traded funds (ETFs) and establish a ‘digital asset promotion committee’ tasked with proposing laws and enforcing sanctions.
South Korean political parties make crypto push
Additionally, the party aims to prioritize the development of a regulatory framework in the country before implementing taxation on crypto gains, effectively postponing the scheduled crypto gains tax until potentially 2027. Originally slated for implementation in January 2025, taxation on income from virtual assets, as well as income from the transfer or lending of virtual assets, has already been delayed once, from 2023 to 2025.
However, the People Power Party is advocating for further postponement, citing the need for additional time to pass necessary amendments and build the required regulatory infrastructure. On the opposing side, the Democratic Party has also entered the fray with promises to permit investors to purchase spot bitcoin ETFs.
The party is set to unveil its comprehensive proposal to institutionalize and revitalize the crypto sector, signaling a growing recognition of the significance of cryptocurrency as a potential election issue in South Korea. The heightened focus on cryptocurrency in the election campaign reflects the substantial interest among young South Koreans, particularly those in their 20s and 30s, in crypto trading.
Shifting sentiment towards cryptocurrencies
This demographic has been actively engaged in the crypto market, drawn by the promise of significant returns and the allure of digital assets. However, the enthusiasm surrounding cryptocurrency in South Korea faced a setback following the high-profile collapse of Terra, a blockchain project led by Do Kwon. In response to the incident, regulatory measures were introduced, signaling a perceived crackdown on the crypto industry.
This regulatory scrutiny initially dampened sentiment towards cryptocurrency trading in the country. Nevertheless, the mood appears to be gradually shifting, with reports indicating a changing landscape as of September 2023. The evolving regulatory environment and the recent pledges made by political parties suggest a potential shift towards a more accommodative stance on cryptocurrency in South Korea.
As the election approaches, the debate over cryptocurrency regulation and taxation is likely to intensify, with both parties vying to appeal to voters, particularly the younger demographic that has shown a keen interest in the crypto market. The outcome of the election could have significant implications for the future trajectory of cryptocurrency policy in South Korea, shaping the regulatory framework and taxation regime for virtual assets in the years to come.
