Gov't cryptocurrency messages too confusing

By Kim Yoo-chul

The Moon Jae-in administration’s top policymakers are sending confusing messages about how to curb speculative investment in virtual currencies.

Finance Minister Kim Dong-yeon said Tuesday that shutting down cryptocurrency exchanges was still a policy the government could implement.

“The shutdown of cryptocurrency exchanges is an option that is still alive. But we need a serious study of this among related ministries,” Kim said in a radio interview. “The government will soon come up with comprehensives anti-speculation steps.”

His remarks came just a day after Chung Ki-joon, head of the economic bureau at the Office for Government Policy Coordination, attempted to soothe investors’ fears about the possible closure of the exchanges.

Justice Minister Park Sang-ki said last Thursday that the government was preparing a bill to shut down the exchanges, roiling the market and alarming investors.

Since then, policymakers have tried to talk down the idea, saying it was a mere idea proposed by the justice ministry and needs to be reviewed by relative ministries.

However, Kim’s remarks indicate the government could still shut down the exchanges.

He reiterated the government will unveil steps to curb the cryptocurrency market, including taxing capital gains from the trading of virtual coins.

“We need reasonable regulations in whatever form as there is continued irrational speculation in virtual money,” Kim said. “There is no unified global standard for cryptocurrency. We are discussing a series of anti-speculation steps, including tax imposition and real-name based transactions.

If the plan goes through, Korea will become one of a few countries to levy taxes on capital gains on cryptocurrency investment. Singapore and Germany levy taxes on investments in virtual currencies depending on factors such as the amount of gains and the length of the holding period. In contrast, other countries like Japan recently eliminated fees.

Kim said millions of Koreans are jumping into speculative trading, which could cause huge social problems.

“It’s fair to say there is high risk in the market. There is a flip-side to today’s cryptocurrency craze. It’s a new technology and could be beneficial on the industrial and economic fronts. But we have to protect investors as well,” he said.

The minister noted the government will keep a close eye on the development of blockchain-based technologies.

“One thing I just want to make sure is that the upcoming steps are aimed at developing the cryptocurrency market not oppressing it. Therefore, regulations should be acceptable and understandable to win public support,” the minister said.

But Kim made it clear the government can’t and won’t cover any losses for individual investors who invest in digital tokens, as virtual currencies are highly volatile assets.

The minister admitted to the government’s failure to send a clear and coordinated message to the market and investors. “We should have been more considerate. We are sorry about that.”