The South Korean government is considering a range of policy options in order to curb what it called an “overheating of virtual currency speculation,” including a possible capital gains tax on trades.
In a Dec. 13 statement published by the Office for Government Policy Coordination, officials from the Ministry of Justice, Financial Services Commission, Korea Communications Commission, Fair Trade Commission, and Ministry of Information and Communication laid out possible policy approaches – subject to legislative approval – for the country’s booming cryptocurrency market. Reuters first reported the developments.
The move is perhaps unsurprising, given the significant trading activity out of Korea – Bithumb is one of the world’s largest by trade volume on a given day – and exchanges there were the first to see bitcoin’s price cross the $10,000 line late last month.
Options particularly relevant for traders include a potential capital gains tax imposition and a ban on foreign traders. That taxation question is an open one, and statement suggests that that private-sector input will be solicited and that approaches in use by other governments – the U.S. Internal Revenue Service taxes bitcoin as a form of property, for example – are up for consideration as well.
South Korea’s cryptocurrency exchanges will also be subject to cybersecurity checks – particularly in the area of data theft and loss – if the measures are approved. Further, exchanges that see more than 10 billion won in daily trading (worth roughly $9.2 million at press time) and in excess of 1 million daily users would be required to obtain approval from the Korea Information Security Agency.
The government is also considering whether to impose a formal ban on initial coin offerings (ICOs), a move that would cement a prohibition on the blockchain funding model put in place by the Financial Services Commission this fall. The statement also suggested that measures against multi-level marketing schemes that involve digital currencies may also be included.
Additional measures up for discussion include a crackdown on the illegal use of industrial space for bitcoin mining and a ban on exchange accounts for minors, according to the release.
That said, officials noted near the conclusion of the statement that the government doesn’t want to create barriers to developments around blockchain, even as it moves to curb exchange activity.
“In addition, we will continue to rectify the side effects of virtual currency speculation, but we will make balanced policy efforts to ensure that government measures do not hinder the development of technology such as block chains,” the government said, according to a translation.
Editor’s Note: Some of the statements in this article have been translated from Korean.
Korean won and physical bitcoin image via Shutterstock