Korea to Remove Tax and Investment Perks From Crypto Exchanges, Heavy Criticism
South Korea’s venture enterprise division has decided to remove crypto exchanges from the newly drafted venture acceleration bill.
Local publications have reported that the venture enterprise division is swiftly pursuing the process of eliminating digital asset trading platforms from its proposal that provides various tax and investment benefits to small to medium-sized firms.
On September 4, the government released a legislative notice and this week, obtained the approval from the regulatory reform commission. If the government does not reverse its decision to include cryptocurrency exchanges in the bill, experts believe that the rapid growth rate of the local cryptocurrency and blockchain sector will inevitably stagnate.
Illogical and Contradicting Initiative
Last month, South Korea’s Ministry of Science and ICT publicly stated that it has adopted blockchain technology as one of the three core technologies of the fourth industrial revolution, alongside big data and artificial intelligence (AI).
The government revealed its plans to promote blockchain training as a key initiative to fuel the growth of blockchain technology, focusing on bringing young talents from the broader financial and technology industries to the blockchain space.
Young-Kyung Won, a software policy officer at the Ministry of Commerce, Industry and Energy, said:
“Although the youth employment issue is emerging as a social problem, the problem of job mismatch is serious. The ministry will foster talents that match a companies’ visions, he said, thereby creating new opportunities for young people who are looking for jobs and creating jobs.
The statement of officer Won was released subsequent to the introduction of the country’s first cryptocurrency and blockchain legislation drafted to legitimize companies in the two industries. In July, the government explicitly emphasized that cryptocurrency exchanges will be overseen as strictly regulated financial institutions, while blockchain projects will be considered as innovative startups working on one of the core technologies of the fourth industrial revolution.
However, in September, the government of South Korea announced its controversial decision to eliminate cryptocurrency-related businesses from its venture accelerator bill, which experts have criticized. Analysts, companies, and investors in the space have said that the bill directly contradicts the progress the government has made in bolstering the cryptocurrency sector.
Refuting Reasons of Government to Remove Crypto Businesses From Venture Bill
The venture enterprise division of South Korea outlined three major reasons to support its decision to remove cryptocurrency businesses from its bill: money laundering, speculation, and hacking. However, the three areas have already been addressed by the government, actively cooperating with crypto businesses.
As for speculation, Kim Yong-bum, the Vice Chairman of the Financial Services Commission said in June of this year that the so-called “Kimchi Premium” has dematerialized in South Korea as exchanges and the government implemented various policies to control and limit the market.
At the time, Vice Chairman Kim also stated that the issue of money laundering has been addressed by both banks and cryptocurrency exchanges in the country through the implementation of new money laundering prevention guidelines.
“Banks are now able to verify cryptocurrency users and investors because of the government’s decision to remove anonymous trading and accounts. The government has also imposed a new money laundering prevention guideline to protect investors and to prevent criminals from utilizing cryptocurrencies to launder money,” Kim said.
Hence, given that the three reasons outlined by the government in the elimination of crypto businesses from the venture accelerator bill were directly refuted by vice chairman Kim in July and other government officials in the FSC, businesses have asked the government to reconsider its decision.
Experts in the local cryptocurrency market has said that if the bill is passed in its current form, it will have a negative impact on the economy of South Korea, as it will lead to local investors utilizing foreign exchanges, lack of protection for investors, migration of talents to overseas markets, and decline in capital needed to operate large-scale cryptocurrency exchanges.
Featured image of South Korea's Blue House taken by Jirka Matousek, from Flicker