#SouthKoreaCryptoPolicy Cryptocurrencies are not regarded as legal money in South Korea, and exchanges, while legal, are governed by a strict regulatory framework. In South Korea, crypto taxing is a grey area: because cryptocurrency transactions are neither cash nor financial assets, they are now tax-free. The Ministry of Strategy and Finance, on the other hand, has stated that it is considering levying a tax on crypto transaction profits and plans to publish a taxation framework in 2022.New Cryptocurrency Exchange Regulations
South Korean cryptocurrency exchange laws are rigorous, including government registration and other procedures monitored by the Financial Supervisory Service of South Korea (FSS).
The South Korean government restricted the use of anonymous accounts in cryptocurrency trading in 2017 and restricted local financial institutions from hosting Bitcoin futures transactions, reporting suspicions of a ban. In addition, the Financial Services Commission (FSC) tightened reporting requirements for banks with crypto exchange accounts in 2018.
The new laws restrict cryptocurrency trading to “real-name bank accounts,” which indicates that a trader (client) must create a real-name account with the same bank as their cryptocurrency dealer in order to deposit or withdraw funds from their e-wallet. In accordance with standard AML/CFT rules and structured transaction reporting requirements, both the bank and the dealer must verify the trader's identity.
The South Korean government amended existing legislation in 2020, extending mandatory anti-money laundering and counter-terrorist financing obligations to all South Korean exchanges and requiring firms to obtain a license to operate from the Financial Services Commission's Financial Intelligence Unit by the end of September 2021.
Who Is Affected by the New Regulations?
The new legislation applies to Virtual Asset Service Providers (VASPs) who engage in the following commercial activities:
selling and purchasing cryptocurrencies
crypto-to-crypto transfers
transmitting