South Korea is becoming very strict in terms of its crypto policies. Recently they seized holdings of investors who failed to file for their capital tax gains, and now they say all South Korean crypto exchanges might shut down. This is because there is a new law that makes it compulsory for every company to register under the FSC, which no one has done yet. So, once this law comes into action, the exchanges will not be able to operate unless registered.
What did the regulators have to say about this?
The South Korean regulator said that every crypto exchange in the country needs to be registered with the FSC. This comes under the new Special Funds act. He also said that even though they are accepting the letters for registration officially, no company has bothered to apply yet. Hence, he warned the companies that they could be shut down in September. And in order to keep operating in the country, these exchanges should start complying with all the new policies of the government.
This new Special Funds act policy came into effect on 25th March 2021. And the companies have received a 6 months grace period in order to do the needful. According to the government, this new policy will make sure that exchanges always keep a tab on a few things. These are allowing only real-name accounts, maintain proper security, and obtain other information.
Why are exchanges not filing for the new law?
Well, the Korean exchanges have their own dilemma in mind. According to them, it will be very difficult to follow these new laws. And so, even if they register, it will be difficult for them to follow the requirements thereafter. Especially, the real name accounts law will make it very difficult for them to operate in the country. And they believe that only a few exchanges will be able to survive the same.
Bitcoin and crypto in South Korea
Up until the latest dip in the crypto industry, there was a huge premium in the price of Bitcoin. This was called the Khimji premium and was due to the hgh demand and low supply in the South Korean exchanges. But now that premium has subsided, and the prices are more or less the same as the global rate. Another important thing to note about BTC and another crypto in the country is tax returns.
The government has made it very clear that they intend to charge taxes on gains made over crypto investments. Starting from 2022, all the gains made in crypto will be taxable. It will be considered as other income and will have a tax rate of 20%.
Do you think that all South Korean crypto exchanges will shut down? Or will they comply and register with the new regulations of the government? Let us know in the comments below. Also, if you found our content informative, do like it and share it with your friends.