South Korea’s ruling party considers approval of Bitcoin ETFs and IEOs in election manifesto, including extension of tax deferral
Proposal to lift ban on Bitcoin spot ETFs
South Korea’s ruling party, People’s Power, is considering enacting laws related to crypto-asset (virtual currency) investment, including the approval of Bitcoin spot ETFs, as part of its campaign pledge for the general election to be held in April this year. Announced. Local media “News1” reported this on the 19th.
Currently, in South Korea, domestic financial institutions are prohibited from offering their own virtual currency ETFs.
Additionally, the Financial Services Commission of Korea (FSC: regulatory authority) announced last month that after approving Bitcoin spot ETFs in the United States, Korean securities companies are prohibited from offering foreign-listed Bitcoin spot ETFs in violation of the government’s position on virtual currencies. Warning that this may occur. In response to this announcement, major securities companies including Samsung Securities and Mirae Asset Securities have suspended brokerage services for overseas-issued Bitcoin spot ETFs as a preemptive measure.
According to reports, the People’s Power Party is considering a review of the legal framework that would allow the approval of crypto investment products similar to those already approved in the United States and elsewhere, including Bitcoin spot ETFs. ing.
The party is also considering banning virtual currency investment by institutional investors and gradually easing the IEO (initial exchange offering) law that governs virtual currency financing. Regarding the former, considering the need to protect user funds, it seems that the government is moving ahead of banks and insurance companies by giving priority permission to investment companies and other institutions that aim to manage assets to purchase virtual currencies.
As a concrete measure toward realizing such virtual currency promotion measures, the ruling party has pledged to propose a virtual currency-related bill and establish a Digital Asset Promotion Committee that will be given the authority to enforce regulations. I have decided that.
What is IEO?
IEO (Initial Exchange Offering) is a mechanism by which virtual currency exchanges support the raising of funds for tokens developed and issued by projects. An IEO is like a one-stop package for projects looking to raise funds, where a virtual currency exchange supports token sales and in many cases even listing. The purpose is to raise funds for new projects related to virtual currency and blockchain, and since tokens are sold through an exchange, it can be said to be highly reliable for buyers.
Virtual currency glossary
connection:South Korean Financial Supervisory Service head to visit US SEC Chairman Gensler next month to discuss virtual currency regulations = report
Considering postponement of virtual currency tax
The People’s Power Party is also considering making a postponement of the virtual currency tax, which is scheduled to begin in January 2025, a campaign promise.
A bill to tax profits generated from virtual currency transactions was proposed in 2021 and was originally scheduled to go into effect in 2022, but was postponed until 2023 after investors flooded the official website of the presidential palace. It was done. In July 2022, it was postponed for another two years due to the stagnation of the virtual currency market, and is now scheduled to start in January 2025.
The ruling party has expressed its intention to prioritize establishing a comprehensive regulatory framework for virtual currencies before introducing tax measures. The party stated that there is no regulatory authority in place to oversee virtual currency transactions, and that it will take at least two years to develop regulations.
If this extension is approved, virtual currency taxation will begin in January 2027.
connection:South Korean parliament agrees to postpone start of virtual currency taxation until 2023
Cryptocurrency investors have become a force to be reckoned with
The People’s Power Party’s announcement of a series of measures to promote virtual currency appears to be aimed at appealing to younger voters, especially those in their 20s and 30s. According to data from the Korean National Tax Service, more than 80% of virtual currency holders as of September 2023 belong to this age group.
Additionally, according to a survey conducted by the Korea Financial Intelligence Unit (KoFIU) last October, the number of cryptocurrency investors in South Korea will reach approximately 6 million people, equivalent to more than 10% of the country’s total population, in the first half of 2024. It is predicted that this will be reached.
An official from the People’s Power Party said, “There are aspects of the government that have neglected the virtual currency market up until now,” and the party wants to officially recognize virtual currencies as assets, making it possible to enact and enforce laws as soon as possible. In order to achieve this goal, he made clear his position that it is important to announce this as a campaign promise.
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