The South Korea Ministry of Economy and Finance said Tuesday (Nov. 30) that the country’s National Assembly passed a bill that will delay the taxation of capital gains from cryptocurrency trading until 2023, Reuters reported.
After the bill gets approval at the plenary session, which is expected to be held Thursday (Dec. 2), South Korea will start to impose 20% capital gains tax on amounts higher than $2.5 million from cryptocurrency trading starting in January 2023, according to the report.
The decision to postpone the capital gains tax until January 2023 comes just over a month before the tax was supposed to begin in January 2022.
South Korean cryptocurrency exchanges had to register with the country’s Financial Intelligence Unit (FIU) by late September or had to notify their customers that they planned to either partially or completely shut down if they couldn’t meet the new regulations.
South Korean crypto exchanges were also asked to provide a security certificate from the internet security agency and partner with banks to ensure that all accounts on their platforms use real names in addition to the FIU registration. The exchanges that registered but didn’t have bank partnerships couldn’t trade in won until they complied with the new rules.
About 40 of South Korea’s crypto exchanges opted for a full shutdown, while another 28 had their security certificates by the deadline but hadn’t secured bank partnerships in time. It’s unknown how many of them have since completed both steps and been able to reactivate.
Four of the country’s exchanges — Upbit, Bithumb, Coinone and Korbit — have registered with FIU and have bank partnerships, meaning they can offer won as an option on their platforms. ProBit, Cashierest and Flybit said they won’t offer won on their exchanges until they land bank partnerships.
The South Korea Financial Services Commission regulatory agency’s decision to make the crypto exchange rules more stringent could cost traders $2.6 billion or more.