South Korea’s crypto surge has seen an unprecedented $100B in virtual assets dominate overseas accounts, reflecting a significant shift in the country’s financial sector.
According to the National Tax Service (NTS), virtual assets represented over two-thirds of the value in registered overseas accounts this year, with 5,419 residents and companies reporting ownership of assets through these accounts.
South Korea Boosts Crypto Holdings
The NTS report revealed that 130.8 trillion won ($98.3 billion) in virtual asset holdings were recorded out of 186.4 trillion won in total registered external financial assets.
The inclusion of virtual assets in mandatory registration, following a tax law revision in 2021, has significantly increased the total value of reported assets, nearly tripling from 64 trillion won in 2022 to 186.4 trillion won this year.
Corporate ownership of foreign virtual assets was substantial, with 73 corporations reporting holdings worth 120.4 trillion won.
The majority of these reports came from cryptocurrency publishers, reporting on their retained crypto assets held overseas. Individuals also played a significant role, with 1,359 individuals registering holdings of 10.4 trillion won.
Despite the dominance of virtual assets, authorities in Korea have deferred taxation on gains from these assets until January 2025. This was a decision that was initially slated to kick in earlier this year.
The move aligns with the country’s broader approach to crypto regulation, which has seen increased scrutiny following the Terra implosion last year.
Read more: The Ultimate US Crypto Tax Guide for 2023
A New Wave of Crypto Regulations
The Financial Services Commission (FSC) of South Korea has mandated public disclosure of supervision and inspection results. This also includes those related to crypto and virtual assets.
This change is part of a broader effort to raise awareness and reduce crypto-related crimes. It hopes to achieve this by ensuring compliance and establishing market transaction orders.
Lee Yoon-soo, director of South Korea’s Financial Intelligence Unit (FIU), said:
“Considering the types of major crimes related to virtual assets, we will present the main inspection items in advance and raise awareness in the market by disclosing cases of business operators’ violations and unfair practices from time to time.”
In addition to increased transparency and scrutiny, the Korea Federation of Banks will soon require South Korean cryptocurrency exchanges with real-name accounts to hold a minimum reserve fund. This move aims to protect users in case of unforeseen issues such as hacking or system failures.
The surge in South Korea’s cryptocurrency ownership, coupled with the country’s proactive regulatory measures, underscores the nation’s burgeoning role in the global crypto sector.
The nation will likely continue to balance innovation with investor safety. Its approach could serve as a model for other countries grappling with the challenges and opportunities of the crypto market.
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