South Korean crypto-exchange Bithumb was in the news this year after it was levied a tax of 80.3 billion won ($60.2 million) by the country’s National Tax Service (NTS).
Bithumb, for its part, was quick to resist, with the exchange arguing that this charge was baseless on the grounds that the country did not even recognize Bitcoin and other cryptocurrencies as a ‘currency’ under the law.
Since then, however, a few things seem to have changed. Bithumb found an unlikely ally recently after Congressman Park Hyung-soo of the National Assembly’s Planning and Finance Committee conceded that the tax levied by the NTS was done so under no legal basis. Hyung-soo, a member of South Korea’s largest opposition party, is the first lawmaker to come out so publicly against the tax.
According to Congressmen Hyung-soo,
“Under the current law, personal cryptocurrency transaction income, whether domestic or foreign, is not regulated and cannot be taxed.”
Another thing that is changing, however, is the treatment of cryptocurrencies in South Korea itself. Back in July, the Minister of Science and Technology announced a taxation plan for crypto that will be implemented next year.
In fact, according to reports, from October 2021, individuals that earn more than 2.5 million won per year ($2000 dollars) in cryptocurrencies must pay a 20% tax on the excess.
According to the tax law amendment bill, even for non-residents and foreign corporations, it is mandatory to submit tax data to virtual currency exchanges.
South Korea’s changing environment for crypto-regulations is not being seen well by the larger crypto-community. While it started off as a very crypto-friendly country, it was also one of the first countries to implement the FATF Travel rule which led to many privacy coins like Monero and Zcash being delisted from South Korean exchanges.
Bithumb, however, has had its fair share of legal action over the past year, with its owners being charged with fraud and their shares being seized by the South Korean Police.