South Korea will not tax earnings from cryptocurrency trading – but might in the future – officials have announced.
Earnings from digital assets will not be subject to tax under existing laws, the country’s Ministry of Finance and Strategy has announced.
But the South Korean government will also keep track of other nation’s tax laws and amend the law as it stands in the future.
A spokesperson said: “We are preparing a taxation plan for virtual assets by comprehensively reviewing the taxation of major countries, consistency with accounting standards, and trends in international discussions to prevent money laundering.”
In December it was revealed the Bank of Korea was recruiting digital currency and crypto-assets experts – but denied it was preparing for a national cryptocurrency.
The successful candidates will be in charge of researching digital payment innovation and blockchain, according to local outlet edaily.co.kr.
But South Korea’s central bank was quick to pour water on speculation about a central bank digital currency (CBDC).
South Korea Gov wont tax on Crypto profits
The Ministry announced that crypto traders are in no obligation to pay taxes based on their income derived from crypto trading. The tax law, as it is right now, does not recognize trading gains as taxable events#Bitcoin #cryptocurrency
— ₿ 𝓙𝓪𝔂𝓮𝓼𝓱 ₿ (@bitjayesh) January 2, 2020
An official from the Bank of Korea’s Digital Innovation Research Group said: “It is necessary to examine not only digital currency but also overall technology including distributed ledger technology and certification according to the current situation.
“There is no change in the existing position that there is no need to issue a CBDC for the time being,” he added.
“This hiring does not presuppose the possibility of issuing a CBDC.”
A recent study conducted by the Bank of Korea concluded that issuance of a CBDC will have negative ramifications on the economy.
The study found that issuance of CBDCs may affect liquidity at commercial banks as the customer demand for deposits or reserves might be reduced.
“This has negative effects on financial stability, which increases the likelihood of bank panic in which commercial banks are short of cash reserves to pay out to depositors,” the report states.