In the latest development of crypto regulations in South Korea, its regulatory authorities are proposing a new crypto law that will supervise virtual currencies like banks and insurance companies. Speaking of supervision, the authorities have identified levying undue profits from digital asset trading through unethical instruments as illegal.
They further stated that market manipulation alongside trading via unethical tools and using unverifiable information to affect prices would be treated as offenses henceforth, with severe punishments. This includes a prison time of minimum of one plus huge fines.
FSC Propose Criminal Penalties for Crypto Violators
On November 23, the Financial Services Commission submitted a report to the National Assembly proposing crypto laws in respect to the Protection of Cryptocurrency Users Act. According to the said report, the regulatory agency is proposing criminal penalties for offenders.
The report also emphasizes that crypto issuers in the country must reveal white papers, coin assessments, and business scorecards to users. Failure to adhere to the laws will attract criminal penalties.
Aside from proposing stiffer penalties for offenders, the FSC, in conjunction with the Political Affairs Committee, are considering implementing the Business Rights Act to oversee virtual currencies instead of amending the current Special Financial Information Act, which was formerly applied for AML in the industry. The reasons were clear – the FSC and the political committee revealed that it was impossible to apply the former law since it only regulated cryptocurrency to prevent money laundering.
Crypto Taxation
South Korea is one of the first Asian countries to initiate a crypto crackdown and come up with regulations alongside Singapore and China. The rising fraudulent activities in the crypto space demanded that countries acted decisively or people would find themselves becoming poorer.
This kickstarted a new wave of crypto regulations across several countries. While China is bent on totally eliminating cryptocurrency usage to drive adoption of its digital Yuan, South Korea and Singapore have been more flexible.
In May, the government issued a warning to exchanges that fail to abide by the new regulatory requirements, which states that every crypto exchange will have to use its real account names when registering with a Bank in the country. This eventually led to the closure of over 40 exchanges, including smaller platforms.
Last month, the country further discussed its proposed crypto tax regulations. Although it was heavily criticized by the opposition, the government confirmed that crypto taxation will begin in 2022, starting from January 1.
The new tax law imposes a 20% tax on all recorded profits from crypto transactions. Following this confirmation, the opposition party The People Power Party proceeded to draft a proposal to reduce capital gain taxes, but South Korea reaffirmed its stance on taxation.
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