Cryptocurrency, justice must be done… Will the Basic Law be enacted this year?

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President-elect Yoon Seok-yeol holds a press conference regarding the relocation of the Blue House Presidential Office to the Yongsan Ministry of National Defense at the meeting room of the Presidential Takeover Committee prepared in the annex of the Korea Financial Research and Training Institute in Jongno-gu, Seoul on the 20th. 2022.3.20

The anticipation of the cryptocurrency market is growing as the Yoon Seok-yeol administration, which will be inaugurated in May, foretells a pro-cryptocurrency policy. As not only cryptocurrency exchanges, but also large corporations such as Netmarble and SK materialize their cryptocurrency business plans one after another, investor sentiment seems to be recovering.

However, the cryptocurrency industry agrees that the government’s negative attitude towards cryptocurrency should be changed before the Yoon administration can push for detailed policy changes. The Korean government has adhered to the position that ‘cryptocurrency and blockchain are separate’ since 2017, when the ICO craze broke out.

◇”We need a definition of cryptocurrency first”

As a pledge related to cryptocurrencies, President-elect Yoon has pledged to Δcompletely tax-free up to 50 million won in cryptocurrency investment income ΔEnactment of the Digital Asset Basic Act ΔAllow domestic ICOs (IEO first introduction) ΔFoster a new concept cryptocurrency market by activating non-fungible tokens (NFTs) presented

The industry argues that a social consensus on the concept and scope of cryptocurrency should be achieved. Various attempts have been made to introduce cryptocurrencies into the system, including the revised Special Act, but the current government has not given a clear definition of cryptocurrencies. There are various terms that refer to cryptocurrencies, such as virtual assets and digital assets. Financial authorities have also been criticized for drawing a line that ‘NFT is not a virtual asset’ over non-fungible tokens (NFTs) to which blockchain is applied and traded with cryptocurrency.

Accordingly, the industry is insisting on the necessity of ‘enactment of the Basic Act on Digital Assets (Cryptocurrency)’. It is a voice calling for a clear legal basis for cryptocurrency business or sales. When the basic law related to cryptocurrency is prepared, there is high expectation that the concept and scope of cryptocurrency will be sorted out, and the relationship with the Financial Services Commission and the Capital Market Act will also be sorted out.

Lee Hae-bung, head of the Upbit Investor Protection Center, attended the policy forum of the Korea Fintech Society on the 17th and said, “A clear agreement on the purpose of the Act must be reached, whether it is the Virtual Business Rights Act or the Digital Cryptocurrency Basic Act.”

He emphasized, “It will be about the purpose of contributing to the national economy by securing the sound development, issuance, and distribution transparency and fairness of digital cryptocurrency-related businesses based on blockchain or distributed ledger technology.” He emphasized that it is necessary to look at the cases of major global countries and to agree on legal terms.

Some argue that the ‘financial regulation sandbox’ should be used by inducing the self-purification of the industry before the relevant basic law is enacted in the National Assembly. Currently, there are a total of 13 amendments to the Virtual Assets Act proposed by the opposition and opposition parties, and in the last meeting of the Bill Review 1 Subcommittee of the National Assembly Political Affairs Committee held in November last year, there was a case where the opposition and the opposition did not fully review the bill. It means there is still a long way to go.

Lee Soo-hwan, an investigator at the National Assembly Legislative Investigation Division, said at the policy forum of the Korean Fintech Society in November last year, “Rather than waiting indefinitely for the introduction of a new law, we should monitor unfair transactions through gatekeeping of exchanges and self-regulation of the association.” Let’s apply the use of the financial regulation sandbox in accordance with the Special Act on Innovation Support.” There is an opinion that the financial regulation sandbox can be an alternative to revitalization for small and medium-sized exchanges that have been pushed back by large exchanges due to difficulties in issuing real-name accounts at commercial banks.

◇”Law of the National Assembly, a long way to go…The discussion on taxation must begin”

Cryptocurrency taxation guidelines should also be specified. The ‘completely tax-exempt up to 50 million won in cryptocurrency investment income’ card that President-elect Yoon took out has not been disclosed in detail and plans so far.

Some view that it is highly likely that the presidential candidates, including President-elect Yoon, only shouted ‘taxation deferral’ without examining legitimacy to get ‘vote’. The industry’s voice is that discussing taxation plans and limits should be prioritized rather than claiming an unconditional ‘taxation deferral’. In the legal world, there is also concern that profits from cryptocurrencies and profits from stocks may be entangled and taxed.

However, the industry complains that the current government’s stance, which has dismissed ‘cryptocurrency’ as a ‘fraud’, needs to be changed first rather than worrying about detailed policy proposals. It is pointed out that the current government’s view of looking at ‘blockchain’ and ‘cryptocurrency’ separately and only nurturing blockchain technology is wrong.

An official from the domestic cryptocurrency trading industry said, “In detail, rather than an individual ‘what policy and how’, we need to change the basic framework and come out with a policy principle of ‘making the cryptocurrency market properly'”. He added, “It is the consensus of the industry that we hope that the promises made by President-elect Yoon will be fulfilled.”

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