Seoul considers cryptocurrency tax

By Kim Yoo-chul

The government said Wednesday it will consider levying taxes on capital gains from the trading of virtual coins, and banning minors and foreigners from opening accounts for cryptocurrency trades.

“The government will impose taxes on capital gains from cryptocurrency trading. Details on how to collect the taxes will be announced soon after a thorough review by related ministries and experts,” the government said in a statement after an emergency meeting to find ways to cool Koreans’ surging investment in bitcoins.

Office for Government Policy and Coordination Minister Hong Nam-ki led the meeting with officials from the justice, science and finance ministries, and other related state agencies.

Koreans’ recent craze for cryptocurrencies, mainly bitcoins, has created calls for policymakers to regulate their markets due to growing volatility and risk amid concerns about a bubble. Bitcoin, the best known cryptocurrency, was valued at $17,000 this week.

If the plan is implemented, Korea will become one of the few countries to tax cryptocurrency-cash exchanges. Germany and Singapore levy taxes on virtual-currency trading depending on factors such as the amount of gains and the length of the holding period. However, other countries _ among them, Australia and Japan _ recently eliminated these taxes.

The government said it will order local banks to apply a stricter individual verification process to clamp down on speculative trading. However, the plan needs approval from the National Assembly.

“After a thorough identification-checking process by banks, only a confirmed account holder can deposit and withdraw money for cryptocurrency trading,” said the statement. “Under the upcoming rule, minors and foreign investors can’t open accounts for cryptocurrency trading.”

Local financial authorities will not be permitted to own cryptocurrency-related assets, acquire them or invest in stakes in companies with them. The government also plans to mandate cryptocurrency exchange operators to publish notices on details of their trading.

More than 1 million Koreans are actively involved in cryptocurrency trading, equivalent to one out of every 50 citizens.

Even middle school students are reportedly checking the price movements between classes, workers are trading cryptocurrencies as they line up for coffee, and housewives as well as members of the older generation are playing the market at home.