- South Korea’s Democratic Party proposes access to spot Bitcoin ETFs as a strategy to garner greater voter support in the country’s imminent parliamentary elections
- The ruling party promises to defer taxation on crypto asset gains by an additional two years
- The election will be a tug-of-war between the two main parties with more favorable crypto policies at the center stage
The South Korean parliamentary elections slated for April 10 have revealed the growing interest in crypto asset investment in the country as the two major parties, the PPP (People Power Party) and the DPK (Democratic Party of Korea) have deployed crypto-friendly promises to appeal to and gather the votes of the crypto-savvy population.
While the PPP assures South Koreans it will push for the delay in taxation of crypto investment gains for an additional two years, its left-wing counterpart proposes access to US spot Bitcoin ETFs.
South Korea’s Liberal Democratic Party To Grant Access To Spot Bitcoin ETFs
The success of the spot bitcoin ETFs has not only shaken the US but has also attained the status of an election strategy in the South Korean landscape. A local news outlet reported back in February that the Democratic Party of Korea sought to allow the trading of Bitcoin Spot ETFs banned in the country as part of their plans to attract more votes in the impending general election.
Shortly after the approval of the spot Bitcoin ETFs in January, the South Korean financial regulator the FSC (Financial Services Commission) declared it illegal to broker any “overseas-listed” spot Bitcoin ETF as doing so “may violate the existing government stance on virtual assets and the Capital Markets Act.”
The ruling party the PPP had earlier promised to ease the cryptocurrency restrictions in the country but fell short due to its inability to carry along the relevant government and financial agencies to ease up the tight cryptocurrency policies.
Exploiting the PPP’s failure to amend the cryptocurrency policies, the Democratic Party of South Korea led by Lee Jae-myung plans to institutionalize virtual assets and revitalize investment by working with the FSC to review the Capital Markets Act.
According to South Korea’s Capital Markets Act, Bitcoin isn’t considered an “underlying asset”, which automatically rules out the possibility of spot ETF investment in the country. However, the Democratic Party is keen on discussing ways to revise the Capital Markets Act with the ruling party if the FSC rejects their proposition again.
Additionally, the Democratic Party intends to reduce capital gain taxation on crypto asset trading by increasing the threshold amount for tax deduction from the present 2.5 million won to 50 million won in 2025.
South Korea’s Ruling Party To Delay Taxing Crypto Investment Gains
In the rumble for voters in the April 10 general elections, South Korea’s People Power Party has proposed a two-year tax break for crypto assets. According to the party, “the tax base has not been established right now” and “there is a need for at least a two-year delay until the amendment is passed and such a system is actually built.”
The party believes that an amendment of the country’s Virtual Asset User Protection Act to incorporate the stock exchange and a robust virtual asset proof of income framework will be necessary before taxes are imposed on virtual asset traders.
The ruling party has been subjected to immense pressure as spot Bitcoin ETFs and freer crypto policies seem to be taking the spotlight in South Korea’s power struggle. As the democratic opposition aligns more with the country’s younger and more crypto-savvy generation, there’s likely to be a major power shift after the April 10 legislative elections.