- South Korea postpones plans to establish a Bitcoin reserve in favor of market integration.
- A new 20% tax on crypto revenues is expected to hit the market in 2025.
South Korea’s Financial Services Commission (FSC) is being cautious about the creation of a Bitcoin reserve, even though more and more citizens of the country are asking for it as protection of digital assets. FSC Chairman Kim Byung-hwan, during a recent interview on November 24, acknowledged the increasing interest in Bitcoin reserves but said that it is still somewhat far off.
This is according to Kim because most people in South Korea want the government to create a Bitcoin reserve strategy as the U.S. does with its stronger approach to cryptocurrency. According to Kim, President-elect Donald Trump’s friendlier view on crypto differs from the previous administration, which was a bit cautious about digital assets. He stated that the U.S. strategy is an active support policy, which differs from South Korea’s more careful approach.
Balancing Crypto Adoption and Investor Protection
However, Kim clarified that South Korea won’t rush into embracing such a strategy without observing changes in the U.S. as well as other countries. According to him, the main objective should be to integrate digital assets into the existing financial system. The South Korean FSC also stated that it would first work towards building a clearer connection between crypto and traditional finance before considering the idea of a Bitcoin reserve.
The FSC has cautioned before of using cryptocurrencies in regular finance, highlighting price volatility and also the opportunity for fraud. Still, with the Virtual Asset Protection Act introduced last July, the commission has shifted its stance and is more concerned with getting crypto into the existing financial system.
Kim also expressed concern over the rapidly rising trading volumes in crypto markets lately, citing that virtual assets now performed better than South Korea’s local stock markets KOSPI and KOSDAQ by trading volume. According to him, with changing prices very fast and high-market conditions, Kim said the need to monitor closely, especially on unfair trading practices should be noted.
South Korea is working on cryptocurrency rules. As recently as this month, the Democratic Party announced a 20% tax on cryptocurrencies that will begin in January 2025. The tax will go into effect if profits exceed 50 million Korean won, or about $35,668. At first, there was a plan to tax profits over 2.5 million won, or about $1,800. However, crypto exchanges worried that would reduce trading activity.
