Like many other countries worldwide, the South Korean cryptocurrency industry has been facing major regulatory headwinds over the past few years. The country’s regulators have recently tightened their hold[1] over the sector through a series of new requirements.
Meanwhile, legislators are debating a way to determine tax gains[2] made on digital asset investments. At the same time, the country is also afraid that crypto is being used[3] by tax evaders and other financial criminals.
In this scenario, it would be expected of the South Korean government to try and gauge a better understanding of the demography of crypto investors it is supposed to target. The latest step towards this has been mandating citizens to declare their crypto investments made on foreign exchanges.
A new year guidebook[4] published by the Ministry of Economy and Finance, mentioned that deposits worth over 500 million won made in overseas accounts on any day this year by citizens and domestic corporations must be reported to the tax office director of the jurisdiction from 1 June to 30 June, 2023.
Notably, overseas cryptocurrency accounts were also specified in this categorization, presumably in an attempt to better formulate tax laws on cryptocurrency capital gains that are set to be implemented from 2023[5]. The 20% tax was earlier set to be introduced this year, however, incessant opposition[6] by investors amidst an election year led to politicians temporarily changing their tune.[7]
Moreover, a surge[8] in the use of cryptocurrencies in illegal foreign exchange transactions has also been noticed over the past year, leading to regulators introducing stringent verification guidelines.[9]
Now, the government is trying to get a better hold on crypto trading and investment
