South Korea has never been a hotspot for crypto mining. However, a new law in South Korea could be making this soon the top spot in the world for crypto miners. According to a report from Cointelegraph.com, South Korea announced on Wednesday that it would allow crypto miners to write off electric bills for their annual taxes.
Crypto mining in South Korea has mostly been done on gaming computers. Most crypto mining in South Korea is not industrial. However, this new tax provision could attract a host of opportunistic businessman.
Crypto is no longer a tax free asset in South Korea
A new crypto tax law will take effect in South Korea as of January 2022. Trading crypto now is considered to be a tax free exchange under South Korean law. However, this new measure will tax profits made on Bitcoin and any other crypto trading at 20 percent. That means if someone buys bitcoin in 2021 and it goes up to $100,000 by 2022, they will have to pay 20% of what they earned.
The majority of South Korea is on board with the new provison. However, many of the crypto enthusiasts are against the new tax and would prefer to keep the laws the way they are. Nevertheless, a new tax law could be a good thing. It’s better than the government outlawing it. And 20% is a reasonable tax. If you read our recent article, Startup In India Proposes Cryptocurrency Regulation, you’ll see that many in India are fighting to get the government to adopt a similar attitude towards crypto. According to Reuters.com, the South Korean Finance Minister said:
“It’s inevitable, we will need to impose taxes on gains from trading of virtual assets.“
The finance minister also said that he didn’t believe crypto should be treated as a currency. He said cryptocurrencies are “intangible assets” and that they shouldn’t be viewed as currencies. The minister makes a great point in this regard. However, the minister did take a quick opportunity to FUD crypto and say that they were easy avenues for criminals to conduct illegal fundraising.
Most folks who trade crypto in South Korea range from ages 20-29. So, the majority of the population doesn’t know a lot about crypto. Those in favor of the law are mostly people who don’t participate in anything crypto related.
Final thoughts
Crypto regulation in South Korea is taking the right approach. It is being fair on taxes across the board. Additionally, the South Korean Finance Minister has a point that cryptos shouldn’t be viewed in the same category as fiat. Governments and regulators need to think carefully about how they tax crypto.
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Aaron is passionate about blockchain and has been an investor in cryptocurrencies for the past years. He enjoys engaging with other people in the cryptocurrency community online, particularly on Telegram, and learning from experts.
