South Korean Political Parties Woo Voters with Crypto Perks Amid Regulatory Uptightness
Summary:
Seeking to garner voter support in the upcoming South Korean parliamentary elections, key political parties are promising cryptocurrency-related perks. The opposition Democratic Party aims to ease restrictions on both domestic and international exchange-traded funds (ETFs) holding crypto tokens, while President Yoon Suk Yeol’s People Power Party pledges to defer taxes on digital asset profits. However, tightened regulations on crypto assets loom, with new rules to be released shortly and trade limits anticipated. The upcoming Virtual Asset Users Protection Act forbids market manipulation and illegal trading, and noncompliance can result in substantial financial or criminal penalties.
In a bid to secure voter support in the impending parliamentary elections in South Korea, major political entities pledge incentives related to cryptocurrency. On April 5, a Bloomberg report revealed that the opposition Democratic Party plans to eliminate curbs on both domestic and international exchange-traded funds (ETFs) with direct crypto token ownership, inclusive of US Bitcoin ETFs. The securities regulator of South Korea had cautioned earlier this year that the local distribution of these Bitcoin ETFs may potentially breach national laws, following their approval in January. Democratic Party’s Hwanseok Choi informed Bloomberg that the party's manifesto supports the allowance of ETFs, irrespective of their domestic or international status. President Yoon Suk Yeol’s People Power Party, on the other hand, seeks to attract voters who favor crypto by promising to postpone digital asset profit taxes, due in 2025. Government data indicates that the first six months of 2023 witnessed nearly six million residents trading crypto via regulated exchanges, accounting for 10% of the nation's populace. Official disclosures point out that 7% of electoral candidates hold cryptocurrencies.
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According to Korea Securities Depository data, crypto users have invested above $200 million in the shares of US-established firm MicroStrategy (MRST). The firm's significant Bitcoin exposure has prompted analysts to categorize it as a virtual Bitcoin ETF. As politician promises mushroom, South Koreans are preparing for stringent crypto asset regulations. Local financial watchdogs will soon roll out fresh stipulations governing token listings on centralized exchanges. Anticipated regulations, based on local press stories, will ban the domestic exchanges from listing digital assets impacted by hacking episodes until the causes are established. Moreover, trading of foreign digital assets on domestic exchanges will be allowed if a white paper or technical specification is available to local investors. The forthcoming Virtual Asset Users Protection Act of South Korea forbids utilization of crypto-related “undisclosed pivotal information,” market manipulation, and illegal trading. This crypto legislation will be effective from July 19, 2024. The government updated this Act in February, implementing substantial fines and criminal penalties for noncompliance, which could result in a prison term of over one year or penalties ranging from three to five times the illegal profits earned.
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Published At
4/6/2024 8:55:29 PM
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