The South Korean parliament today passed a law that for the first time introduces a legal framework for Bitcoin (BTC) and other cryptocurrencies.
Today was a great day for cryptocurrencies in South Korea: The country’s parliament passed a law on financial transactions, under which Bitcoin (BTC) and CO. will also be regulated for the first time in the East Asian country.
South Korean crypto law good or bad?
The law was viewed positively from many sides and was understood as a „legalization“ of cryptocurrencies in South Korea (not that the coins had previously been prohibited in the country). Simon Kim, CEO of Hashed, a company that supports the development of crypto-startups, for example, told Cryptonews.com
„So far there has been a great deal of uncertainty in South Korea regarding the regulation of cryptocurrencies. However, with the new law, cryptocurrencies have been officially classified as an asset class by the institutions, and virtual asset operators can operate in Korea under the applicable laws. I believe this is a strong, positive signal for South Korea, which is proving to be a perfect testing ground for blockchain and crypto currencies on the global scene.“
However, this official recognition comes at a price: Exchanges must report the confirmed clear names of their customers to the Financial Intelligence Unit (FIU) after the law comes into force in March 2021. With Upbit, Coinwon, Bithumb and Korbit, four South Korean crypto exchanges are already working with clear names. Many smaller competitors may now be forced out of business.
Another important point: The law will mean that cryptocurrencies will be officially taxed in the country for the first time. Hard to believe, but so far this has not been the case. At the end of last year, the South Korean Ministry of Economy and Finance clarified this fact once again:
„Profits from individual virtual asset transactions do not constitute listed income and are not taxable“.