Blow To South Korea’s Crypto Industry As Taxes Set To Increase
Players in the industry believe that the regulations will scare away investors.
Korean Trading Platforms To Lose Venture Firms Status
The cryptocurrency industry in South Korea has suffered a major setback following a government decision on certification. The state has rejected a proposal to have crypto and blockchain sector classified as venture companies.
The proposal was fronted by Korea’s ministry in charge of SMEs. The law wanted the local crypto sector to be omitted from the state venture firms category. During the early rollout of the law, all ventures under cryptocurrencies would be categorized alongside bar and gambling ventures. The classification means that the market would lose tax benefits. Additionally, they would miss out on financial benefits given to local budding companies.
At the moment, top exchanges in Korea are still classified as venture businesses. However, this status is set to expire by the end of 2018. Upbit and Bithumb are among prominent exchanges operating in Korea.
Cryptocurrency lobby groups have said that the law could badly harm the industry at large. They have aired their opposition regarding the matter. Media reports in Korea had indicated that the government had already agreed to implement the proposal through parliament.
According to the new proposals, crypto trading platforms will be taxed twice. Additionally, they will no longer be beneficiaries of the 75% tax in the acquisition. The law further proposes that exchanges will not have the rights to get credit guarantees.
Crypto Ventures To Migrate
The new proposals also affect upcoming exchanges that will be established in Korea this month. Such platforms will not be recognized as authorized venture firms. This proposal shows a dark future for startups seeking to join the Korean space.
Withdrawal of tax offers in the sector means that research activities in the crypto sector will be crippled. Chances are high that the emerging businesses might migrate from Korea to favourable countries.
Major crypto entities in the country are already looking for means of venturing into other countries. Recently, Upbit exchange extended operations into Singapore. The move was its first on an international level. Operations under the Singapore branch are set to begin in October.