South Korean Economist Warns: New Tax Law Could Slow Crypto Market Growth

The South Korean government recently announced their intention to tax cryptocurrencies, sparking a backlash. According to the Korea Times on June 21, Sung Tae-yoon, an economist at South Korea’s Yonsei University, warned that the decision to tax cryptocurrency capital gains could slow the growth of the technology’s nascent market.

Sung said that imposing taxes on the crypto market while it is still in its infancy is a "premature" decision. He is concerned that strict regulations or taxes could prevent the booming cryptocurrency industry in South Korea. He also believes:

“Cryptocurrencies cannot be considered universal assets like traditional paper money.”

Reasons behind the bill

Opposition economists, such as Kim Jin-ill of Korea University, argue that regulation is necessary even if it stunts growth in new markets. But some critics say the government is imposing the new tax because of fiscal uncertainty caused by the coronavirus pandemic.

According to the news report, the government plans to tax more than just cryptocurrencies. They quoted South Korean Finance Minister Hong Nam-ki as saying:

“Through this year’s tax system reform, we will consider introducing new types of taxes such as the digital tax, which is an additional tax on the online business activities of overseas IT companies such as Google and Amazon.”

As previously reported by Cointelegrah, Portugal has emerged as a cryptocurrency regulation-friendly country, exempting crypto traders and miners from taxes.