Cryptocurrency market forecast to boom under Yoon administration

The Korea Times

The Korea Times

Finance

Sun, December 10, 2023 | 06:47

Cryptocurrency market forecast to boom under Yoon administration

Posted : 2022-03-11 16:32

Updated : 2022-03-23 15:38

President-elect Yoon Suk-yeol speaks during a local virtual asset conference in Seoul, Jan. 20. Joint Press Corps-Yonhap

Exchanges request Yoon to allow corporate investment in crypto market

By Lee Min-hyung

Korea's cryptocurrency market will boom under President-elect Yoon Suk-yeol as the incoming administration is widely expected to adopt a deregulatory stance by easing taxation on crypto trading and allowing an initial coin offering (ICO), officials said Friday.

Yoon made a series of campaign pledges which center on easing tight regulations introduced by the incumbent administration.

First and foremost, he pledged to reduce taxation on crypto gains.

Last year, the Ministry of Economy and Finance planned to impose tougher crypto income taxes on those whose gains exceed 2.5 million won ($2,225) beginning from 2022. The plan, however, hit a snag amid fierce political opposition. One key reason behind the backlash was that the standard was too tight compared to taxes on profits from stock investments. Stock investors are required to pay income taxes only when their gains top 50 million won. This led the government to delay the plan to 2023.

However, Yoon's election win has significantly lowered the chances of the taxation plan being realized, as he promised to change the standard to be on a par with that of the local stock market.

Other noteworthy pledges by Yoon include the establishment of a basic law on digital assets. This consists of tightening the monitoring of illegal crypto trading and widening insurance policies to tackle lingering concerns over hacking and system errors.

"We hope the incoming administration builds an environment where companies can also invest in cryptocurrencies," an official at a local cryptocurrency exchange said. "For now, banks do not issue any accounts for companies to do so due to the regulatory stance of the government. But with Yoon sharing a set of pledges to deregulate the market, we expect him to help allow more capital to flow into the market and not just from retail investors, but corporations as well."

The crypto market is upbeat about the possible deregulation of the concept of the ICO under Yoon's presidency. The idea is similar to that of an initial public offering in the stock market. Any firm that wants to raise money will launch an ICO by creating a new coin. However, the procedure is blocked in Korea for the time being due to the government's concerns over high investment risks.

Nonetheless, Yoon plans to allow the ICO concept in phases after enabling an initial exchange offering (IEO). As crypto exchanges supervise the sale of coins through the IEO, the process guarantees more security, according to the President-elect.

"As crypto exchanges serve as trading agents, the IEO comes with fewer risks than the ICO," Yoon said while announcing his crypto market pledges in January.

Another official from the industry also said the stance, in itself, would help drive the growth of the overall ecosystem.

"Even if it takes much more time until crypto trading is fully institutionalized, such a vision is definitely an optimistic sign for the industry," the official said. "The crypto market has been faced with multiple hurdles due to regulation for the past few years, during which, overseas crypto markets have achieved outstanding growth. We expect him to listen to the voices of the industry in a more market-friendly manner for Korea's leap forward in the industry."

Despite Yoon's rise to the presidency, major bitcoin prices did not show any drastic upward movements. At 2:20 p.m., Friday, the Bitcoin was traded at around 48.01 million won, down 1.52 percent from the previous day, according to data from Bithumb.

mhlee@koreatimes.co.kr