Some South Korean experts are worried that taxing cryptocurrency earnings could throttle the local cryptocurrency industry.
The Ministry of Finance’s reformed tax system, to be unveiled in July, will tax digital assets such as cryptocurrency, though the details have yet to be released.
Economists warn this could cause problems for an industry still in its infancy.
From the Korea Times:
“It is premature for the government to impose cryptocurrency taxes at a time when the market has not developed enough in a stable manner,” Yonsei University economist Sung Tae-yoon said. From an economic viewpoint, he said, cryptocurrencies cannot be considered a universal asset like traditional paper currencies.
He also raised worries that any tough regulations or taxation schemes may block growth in the overall digital currency market.
“The financial authorities should think twice before imposing taxes on the market, as the digital currency industry is still in its infancy,” he said. “Any rash taxation or introduction of regulations can be a stumbling block for sustainable growth of the industry.”
That argument might fall of deaf ears, especially as South Korean financial officials scramble to find ways to pay for the nation’s expansionary budgets to cope with the COVID-19 pandemic.
Moreover, even if taxes may slow short-term growth, taxations and regulations are critical to preventing potentially disastrous financial crises.
“A fiasco involving commercial banks’ mis-selling of derivative-linked funds last year clearly showed how important regulations are in the financial industry,” Korea University economist Kim Jin-ill told the Korean Times. “To prevent the recurrence of such financial accidents, the government needs to introduce more careful regulations on the emerging digital currency market.”
Also in the Korea blockchain space…
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