Newly elected South Korean President Yoon Suk-Yeol is a self-proclaimed supporter of cryptocurrencies, vowing to achieve deregulation, lower taxes and the creation of unicorns in the industry. Will the nation’s crypto bulls see the promise be fulfilled?
Last week, conservative candidate Yoon Suk-Yeol was voted in as the leader of South Korea, besting Democratic Party candidate Lee Jae-myung by a 1 percent margin in what was seen as the most closely fought presidential race in the country’s recent history.
Chief amongst his promises for the victory was his policy positions aimed at promoting the crypto industry in South Korea which is currently home to a more than $46 billion virtual asset market, according to a release from the country’s regulator Financial Services Commission (FSC). Separately, the Korean won is estimated to be the third most utilized currency for Bitcoin conversions.
And if he makes good on his pledges, this would mark a sharp reversal from the previous administration which tightened virtual asset regulations, including an amendment to money-laundering rules in March last year that led to the closure of around half of the country’s crypto exchanges.
Crypto Deregulation
One of the key crypto promises by Yoon was the review of initial coin offerings (ICO) after it was banned by South Korean regulators during its peak in 2017.
«The global virtual asset market is worth some $2 trillion and there are about 7.7 million crypto investors in Korea,» said Yoon during his campaign. «My administration will actively create an environment where young people and investors can invest with confidence.»
Lower Taxes
Yoon also vowed to lower taxes, raising the proposed threshold for capital gains tax for crypto profits by 20-fold to 50 million won ($42,000).
The existing capital gains tax of 20 percent for crypto gains above 2.5 million won is set to come into effect in 2023.
The roll-out of the rule has already been delayed by one year and South Korean deputy prime minister and finance minister Hong Nam-ki recently issued a statement noting that any further postponement of enforcement «will lead to the loss of public trust in government policy and undermine stability in the legal system».
Combating Crypto Crimes
Of course, one of the major reasons for crypto opposition is due to concerns about money-laundering and other financial crimes.
On this matter, Yoon – himself a former public prosecutor who helped imprison two ex-presidents over corruption charges – promised to introduce some form of legislation that would help return crypto profits made from illicit activity to victims.
Blockchain Unicorns
In addition to enhancing the rules and regulations for crypto investors, Yoon also expressed his desire to support crypto businesses as a whole with hopes to help the industry create unicorns, startups with a value of $1 billion or more.
«To realize the unlimited potential of the virtual asset market, we must overhaul regulations that are far from reality and unreasonable,» Yoon said in a speech during a virtual asset forum in January.
«We must shift to a negative regulation system to ensure at least the virtual asset market has no worries.»
Industry Leader Support
And should Yoon fulfill his commitments to the crypto market, he may not need to go at it alone with a number of industry leaders already voicing support.
In December, Korea Exchange chief executive Sohn Byung-doo called for the embracement of cryptocurrencies and preparations for an institutional infrastructure, highlighting virtual assets as a major investment of choice in South Korea with trading volumes rivaling that of the KOSPI, the country’s top equity benchmark.
In the same month, FSC vice chairman Do Gyu-sang told Korean legislators that the blanket ban against ICOs should be reexamined and reversed, underlining that such fundraising activities should be regulated under the country’s Capital Markets Act.
Post-Election Doubts
Not all are convinced that Yoon will follow through with his election promises for cryptocurrencies.
Some view public support for crypto as a tactic to win swing votes from the youth with a recent local business survey saying that 4 out of 10 South Korean individuals in their 20s and 30s have virtual asset investment experience.
Others point to Yoon’s «digital asset promotion agency» as a sign after it was championed as a government body to oversee blockchain-related activities but lacked specificity before no longer being mentioned in campaign literature.
Interestingly, rival candidate Lee was also a vocal crypto supporter during his campaign, calling the digital asset class an «undeniable reality« that is «recognized by many people as a means of trading and storing value» while also vowing to reintroduce ICOs with better regulations in place for investor protection and market stability.
