South Korea considers taxing Bitcoin profits to regulate the "Speculative Mania"

6 years ago - Published in Finance, Fintech Land, Technical Analysis

South Korea will ban minors and foreigners from trading in virtual currency or creating bank accounts for them in the country, a government statement obtained by Reuters ahead of an official release showed.

It will also tax profits from income from virtual currency and impose stricter authentication for traders, the Office of Government Policy Coordination, which reports to the prime minister, said.

Despite a boom in transactions of digital currencies, such exchanges are largely unregulated, as they are not recognised as financial products. Also there are no rules protecting people who invest in digital money.

Local English language news source The Korea Times said the term refers to “those who check the bitcoin price day and night expecting its value to increase.” The publication added, “More and more people have been jumping onto the bitcoin bandwagon in recent weeks when the value for the cryptocurrency surged by a huge margin.”

The announcement follows an emergency meeting by deputy ministers of financial regulators due to overheated security trading in virtual currency. Last week, the price of Bitcoin, the most popular of the currencies, fluctuated between 14 million won ($13,000) to 25 million won ($23,000). There are concerns over it being a bubble due among rampant speculation.

Financial institutes such as banks will be banned from owning virtual currency, buying them, mortgaging them, or owning shares in them.

Those who use virtual currency will go through a stricter guideline for authentication. The government already previously announced that it will prevent ICOs.

Suggesting that the concept of “bitcoin zombies” may be real, CNN claims that South Korea has gone “bitcoin wild.” Students reportedly are checking the price between classes, workers are trading it as they line up for coffee and grandparents are playing the market at home.

There are two possible options South Korea may be considering: an outright ban on cryptocurrency trading or the implementation of strict regulations. Although the ban option may be extreme, South Korea did ban initial coin offerings in September.