Ryan Van Wagenen has been with Global Private Equity nearly a decade and has been focused on the technology sector since being promoted to Director within the firm in 2011. With the recent boom of cryptocurrency and some of GPEs investments being tied to the blockchain, Van Wagenen has developed a strong understanding of bitcoin and some of the other alt coins. One of the biggest news items of interest for cryptocurrency will be regarding tax implications, especially in Asia. Although not too specific to this point, South Korea has been quite vocal on regulation and future tax implications for these alternative assets. The minister of strategy and finance of South Korea plans to announce a crypto taxation framework this year. It is expected that the government will start taxation in 2019.
At the recently concluded meeting at the summit, South Korea plans to reveal its cryptocurrency tax plan, together with the plan of G20 to field recommendations to regulate the crypto sector by the month of July. The conclusion of the G20 summit eliminates the fears of many Bearish traders and alarmists. The summit ended agreeably for the cryptocurrency ecosystem and there were no negative comments made.
According to one of the publication in Korea, the Ministry of Strategy and Finance considers the capital gains of crypto adopters and some other income taxes as potential inclusions for the tax plan. According to the ministry, they don’t have any specific time frame at the moment, but they are thinking of announcing tax for the virtual money in the first half of 2018. Other proposals include the ministry levying a tax on income generated by the sale of digital currencies or cryptocurrencies. On the bear side, Kenneth Rogoff, a Harvard economist, has shared his views on the likelihood of bitcoin falling to $100 being greater than BTC rising to $100,000 a decade from now.
The government is aware that there has to be some changes in the existing taxation laws in order to accommodate the taxation on virtual currency taxations. They realize that it is necessary to make amendments to the income tax law in order to add digital currency transactions to the category of objects that are taxable. It is expected that the Tax Division of the Ministry of Information and Communication will submit a proposal in order to amend the taxation bill in August 2018 at the National Assembly to pave the way for the cryptocurrency taxation to start in 2019.
Unlike exchanges, the residents of South Korea are currently not paying taxes on cryptocurrency. They pay a 2.2 percent local income tax and a 22 percent corporate tax. The taxation ministry of the country has been learning more about the crypto taxation approaches being taken by different countries, including the United States, the United Kingdom, Germany and Japan.
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Ryan Van Wagenen also noted that South Korea is currently considered to be the capital of cryptocurrency in the world. In fact, many experts would argue that the country is the world’s third most important market. It has also been estimated in some studies that at least three out of ten workers in South Korea have invested in cryptocurrency an average amount of 5.6 million Yuan. Furthermore, over eighty percent of the investors in the country had made a great profit on their investment. There were only 6.4 percent who had lost money.
The government of South Korea anticipates establishing a complete crypto regulation after the upcoming local election on the 13th of June. On the following day, June 14, the Ministry of Finance and Economics will be holding an international digital currency conference in Seoul for the members of G20. In June 15, another working session for the whole G20 international finance system is also scheduled.
With the approach of South Korea now becoming the regulatory framework, such move could bring remarkable impact and positive condition for the nation. This is due to theoretically legalizing crypto trading by providing the general public and traders more confidence to adapt to the new technologies. However, the market impact will still depend on the results realized in the middle of the year. Nevertheless, the expectations are still positive.
Ryan Van Wagenen also mentioned that positive regulatory & taxation framework in the country could actually bring a great boost to the markets of global cryptocurrency. Hence, it will be highly interesting to see which new regulatory guidelines and cryptocurrency-taxation rules will be announced by South Korea in the future.
Anthony Young
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