South Korea’s crypto community is deeply concerned about the upcoming 20% tax on crypto gains, warning that it could have devastating effects on the market. The Ministry of Economy and Finance in South Korea plans to implement this tax in 2025, after several delays. This tax will apply to gains exceeding 2.5 million won, with an additional 2% local income tax on top of that.
Local exchanges like Upbit, Bithumb, and Coinone are worried that this tax will drive investors away from the market, leading to a significant drop in trading volumes. They point out the stark contrast in tax treatment between cryptocurrencies and traditional financial instruments like stocks and bonds, where the threshold for taxation is much higher.
In addition to the tax concerns, South Korea is also gearing up to enforce the Virtual Asset User Protection Act, starting on the 19th of this month. This act will give financial authorities the power to evaluate the suitability of currently traded coins, adding another layer of scrutiny to the crypto market.
An anonymous spokesperson from a crypto exchange expressed fears that the 20% tax will discourage investors and potentially lead to the shutdown of many exchanges next year. This tax, combined with the increased regulatory oversight, could pose significant challenges for altcoins that may struggle to meet the new standards set by financial regulators.
Overall, the crypto community in South Korea is on edge as they anticipate the impact of these new regulations and taxes on the market. The coming months will be crucial in determining how investors and exchanges adapt to these changes and whether the market can weather this storm of uncertainty.