South Korea To Ease Cryptocurrency Curbs

Policymakers will work on measures to "properly" regulate the sector within G20 framework.

by Marin Marinov
17 May • 3 min
In Regulation

South Korea is signalling a softer stance on cryptocurrency trading after the recent G20 meeting, when financial policy makers came to the agreement that digital coins can be recognised as financial assets. After their meeting in March this year the Group of the world's major economies set a deadline for July about the introduction of anti-money laundering measures in the sector, Korean media reported on Wednesday.

 It's almost certain that cryptocurrencies will be classified as assets and the main issue will be centered on how to regulate them properly under the unified frame that will be agreed upon between G-20 nations. Given the current stance, this isn't good, but we will step up efforts to improve things,” an unnamed official from Korea’s Financial Supervisory Service (FSS) told Korean Times newspaper on Wednesday.

FSS is set to work together with the Financial Services Commission (FSC) to develop measures that would put in motion the government's plan to endorse cryptocurrencies as financial assets. FSC is in charge of policy regulations, while FSS oversees financial institutions.

G20 deadline – obligatory?

The G20 deadline concerns the implementation of anti-money laundering (AML) and counter-terrorist financing (CTF) measures for cryptocurrency, based on Financial Action Task Force (FATF) Recommendations.

 “We commit to implement the FATF standards as they apply to crypto-assets, look forward to the FATF review of those standards, and call on the FATF to advance global implementation,” financial regulators from the G20 said in a communique from the Buenos Aires meeting.

two big words

The decisions of G20 and FATF are not obligatory for member states. G20 is a consulting forum that discuses policies and aims to promote global financial stability. FATF is an inter-governmental organization for fighting financial crimes, comprising 37 members, including South Korea. It set ups standards for combating money laundering and terrorism financing.

New cryptocurrency taxes

The G20 definition of cryptocurrencies as financial assets “means trades potentially could be subject to capital gains tax”, according to Bloomberg.

In South Korea, profits from crypto trading are tax-free because of the absence of a legal definition for cryptocurrencies. However, crypto exchanges pay income taxes as other companies.

The National Tax Agency (NTA) has already teamed up with the country's finance ministry to collect taxation data regarding cryptocurrency, according to local media reports.