South Korea’s Ministry of Finance, Ministry of Science and ICT, Financial Services Commission and pretty much every other government body involved in mainstreaming cryptocurrency in the nation is urging lawmakers to get moving and pass revisions to the “Act on Reporting and Using Specified Financial Transaction Information,” a.k.a. The Financial Transactions Reporting Act (FTRA).
Only if those revisions are passed can the government carry out follow-up policies for the cryptocurrency industry.
According to the Korean-language blockchain news site The Block Post, the authorities are especially keen to pass the revisions prior to June, when the FATF will be inspecting whether members countries — including South Korea — are implementing the task force’s anti-money laundering (AML) guidelines.
Blockchain and cryptocurrency companies, too, are calling on lawmakers to pass the revisions as soon as they agree to a schedule for February’s extraordinary parliamentary session.
The revisions to the FTRA, which have already passed several parliamentary committees, call on cryptocurrency exchanges to register with the Financial Services Commission’s Financial Intelligence Unit (FIU), among other things.
A number of government initiatives depend on lawmakers passing the revisions, namely formulating cryptocurrency tax policy, providing regulatory exemptions to blockchain- and cryptocurrency-based overseas remittances and executing the FAFT’s AML guidelines.
The Finance Ministry will announce revisions to the tax law in July or August. It would really like to include cryptocurrency in that revision, but it needs data to do that. The revised FTRA would give the ministry the basis to obtain data on cryptocurrency exchange users and transaction details.
The Financial Services Commission would like to get to work crafting the FTRA’s executive ordinance and ensuring FAFT compliance. And the Ministry of Science and ICT and other members of a committee screening projects for participating in the government’s regulatory sandbox for innovative ICT services is waiting for the revisions to pass before re-debating the case of MOIN, a blockchain-based overseas remittance service.
Crypto income to get taxed as additional income?
And speaking of tax authorities, government officials are telling the Korean-language blockchain news site The BChain that authorities have begun in earnest considerations to tax cryptocurrency income at 20% by classifying it as “additional income” like lottery winnings and lecture fees.
Discussions of the crypto tax have reportedly been transferred from the Finance Ministry’s property tax section to its income tax section. A government official said that though the ministry tax plan is still up in there air, given the nature of the division handling the issue, it’s likely the government will view cryptocurrency income as temporary additional income rather than transferred assets like real estate.
Interestingly, the B Chain notes that the tax authorities wouldn’t need to wait until the revisions to the FTRA to tax cryptocurrency income as additional income since they wouldn’t need the details on each and every transaction. In fact, the National Tax Service has already done something of a test run by taxing Bithumb for additional income made by non-residents.
That said, if the government were to slap an income tax on locals for their cryptocurrency earnings, it would generate controversy regarding a whole list of issues.