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South Korea's newly elected President Yoon Seok-yeol announced Tuesday that he will push for a tax delay on cryptocurrency investment interests at least until a new set of regulations known as the "Digital Assets Fundamentals Act" is enacted.
South Korea's cryptocurrency tax was originally set to take effect for fiscal year 2022, but was pushed back to 2023 last December. E-daily reports that president Yoon Seok-yeol will ensure the cryptocurrency tax law will not take effect until there is reasonable legislation to protect consumers. The law is expected to be implemented before 2024.
The president-elect's presidential transition team has been considering further its options for tax delays since March, when Yoon Seok-yeol won the election, citing the lack of sufficient laws to justify a tax on digital assets.
Daba was formed by the Financial Services Commission (FSC) this year and requires a series of laws related to consumer protection. This act relates to the issuance of tokens, the NFT, the CEX list, international finance as it relates to cryptocurrencies and includes a response to U.S. President Joe Biden's executive order on cryptocurrencies.
Through DABA, the FSC plans to introduce a cryptocurrency insurance system as a last resort measure to help combat hacks, system failures and unauthorized transactions.
The controversial cryptocurrency tax law that has been delayed will once again levy a 20% tax on cryptocurrency investment returns on about $2,100 per year.
An FSC representative told E-daily on Tuesday that "taxation of investment income from virtual assets should be done after investor protections are in place."
The CEO of South Korean cryptocurrency Venture Capital firm Hashed agreed, stating that "It makes no sense to impose a tax on cryptocurrencies before enacting relevant laws, which should clearly state the scope of crypto-related businesses and are a prerequisite for taxation."
"Without in-depth research into the industry and the strategies that have been strongly implemented, the push for a tax on cryptocurrencies will likely cause many accidents and pose some serious problems with tax equity because the investor protection system for cryptocurrencies has not yet been implemented."
While the FSC works to draft new bills as part of the DABA, President Yoon Seok-yeol plans to set up a Digital Industry Promotion Authority to serve as a reference point for legal issues in the cryptocurrency industry.