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South Korea May Delay Crypto Income Tax Rule to January 2022

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South Korean lawmakers want to delay the implementation of the new rules in order to give more time to crypto exchanges to get ready.

South Korea may extend the implementation of its earlier proposed crypto income tax rule to January 2022, an extension of about 3 months from the earlier proposed October implementation plan. The plan to extend the implementation of the rule was revealed in a report published by a local South Korean media Dong-a Ilbo.

Per the reports, the lawmakers from the South Korean National Assembly’s planning and finance committee issued a report suggesting that it is necessary to consider enforcing the crypto income tax rule from at least January 1, 2022, in a bid to give enough allowance to cryptocurrency exchanges to put plans in place to implement the rules.

Dong-a-ilbo noted that the lawmakers look to hand out this allowance because cryptocurrency exchanges complained that they did not have enough time to adjust their books and develop the right crypto reporting tools to be able to comply with the tax rules.

Crypto Income Tax in South Korea

Earlier, Coinspeaker reported the South Korean proposal to levy a 20% income tax on crypto gains of 2.5 million Korean won, or about $2,000 due to the increasing rise of earnings on exchanges. Yonhap news agency said at the time:

“According to the data released by Rep. Park Kwang-on of the ruling Democratic Party, accumulated commission-related sales of some 30 cryptocurrency exchange operators are presumed to have reached 700 billion won [~USD$658 million] as of the end of last year, compared with an estimated amount of 8 billion won as of the end of 2016.”

To comply with this, South Korea put up the “Specific Financial Information Act” which details the timeline expected for exchanges to complete a reporting system slated for March next year, the completion of a Know Your Customer (KYC) procedure by September 2021 so that deposits and withdrawals can be adequately captured before the implementation which is slated to commence by Oct. Should the new extension be agreed on following the Subcommittee’s meeting to decide on a specific taxation time next week, crypto exchanges will have a 3-month window to get ready for the new crypto tax regime.

South Korea and Cryptocurrency Exchanges

South Korea is renowned for having zero tolerance for misdemeanor especially as it relates to cryptocurrency exchanges. South Korean authorities conducted about two consecutive raids on Bithumb cryptocurrency for alleged money laundering levied on the chairman of the board at Bithumb Korea and Bithumb Holdings Lee Jung-hoon.

The clampdown on Bithumb spurred the exchange to give itself up for sale with China-based cryptocurrency exchange Huobi Global among the top outfits to take over the exchange. Apparently, the zero-tolerance of South Korea on situations of money laundering and tax fraud is unacceptable, a position that may allow the country to give the concerned parties the needed allowance to adjust to the changes that are set to come.

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Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.



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$45B DeFi market cap and soaring TVL suggest the best is yet to come

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The decentralized finance sector continues to charge full steam ahead as multiple tokens notch new all-time highs and the total value locked in DeFi protocols grows with the passing of each week.

Data from Messario shows projects like AAVE, Uniswap (UNI), SushiSwap (SUSHI) and Synthetix (SNX) have all rallied by double-digits, creating a positive feedback loop as more users engage with the protocols to yield farm and capitalize on flash loans.

DeFi asset performance. Source: Messari

As the price of Bitcoin (BTC) and Ether (ETH) reached new highs in recent months, the total value locked (TVL) in DeFi has risen as well, increasing optimism and engagement on the various DEXs and lending platforms. Data from CoinGecko shows that in the past 6 months the DeFi total market capitalization has grown to $45 billion.

Total market cap of all DeFi tokens. Source: CoinGecko

From Jan. 1 to Jan. 25, DeFi platforms have collectively seen the TVL rise from $15.6 billion to a record-high $26.1 billion.

In fact, according to DeFi Pulse, the total value locked across DeFi protocols increased from $21.49 billion to $26.173 billion in the past 4 days alone.

This sharp increase in TVL was helped by a $400 surge in the price of Ether from $1,053 on Jan. 21 to a new all-time high of $1,459 on Jan. 25, but Ether can’t account for all the gains as shown by the increasing number of DeFi tokens which are also securing new all-time highs.

Total value locked in DeFi. Source: Defi Pulse

Despite these impressive developments, the DeFi sector only accounts for just 4.6% of the total cryptocurrency market capitalization which currently stands at $976.6 billion.

Despite representing just a small sliver of the total crypto market, DeFi’s rapid growth suggests the sector is primed for explosive growth as cryptocurrency becomes more mainstream.