South Korea is set to hold its midterm elections today, which will serve as a referendum on President Yoon Suk Yeol’s administration. The outcome of the elections will have significant implications for the country’s crypto industry, as the two main political parties, the Democratic Party of Korea (DPK) and the People Power Party (PPP), have varying stances on crypto regulation.
South Korea is a major player in the global crypto market and around 70% of all reported foreign assets are crypto. Changes in its regulatory framework can have ripple effects on the broader crypto ecosystem. The election outcome will impact investor sentiment and market dynamics, including the crypto market. Supporting policies can attract more investment into cryptocurrencies, while uncertainty or unfavorable policies may lead to market volatility.
South Korea’s fight for crypto regulation
The ruling party, PPP, has shown a willingness to postpone the implementation of digital asset taxation. They are open to discussions regarding the timing and details of implementing taxation on digital assets. The party plans to create an administrative framework for digital assets and standardize listing criteria for all centralized exchanges to protect investors. Additionally, the PPP will permit token launches for projects that have investor protection mechanics in place.
The PPP will also push forward Phase 2 of the Digital Asset Investor Protection Law, which aims to regulate and protect investors in the digital asset market. This initiative is part of broader efforts by the South Korean government to establish a legal framework for cryptocurrencies and related activities.
On the other hand, the opposition party, DPK, has shown a willingness to lift curbs on investing in U.S. Spot Bitcoin ETFs for digital assets and add digital asset ETFs on ISA for taxation benefits. The party has vowed to increase the non-taxed range for digital asset taxation from $1,850 to $37,000.
Other proposals by the DPK include combining the profit and loss for a five-year standard for taxation and initiating a business law for digital asset businesses to operate. The party also plans to build a monitoring system to combine all order books for centralized exchanges operating in South Korea.
The news follows recent reports that a Montenegro court has ruled in favor of extraditing Terraform Labs co-founder Do Kwon to South Korea. The decision overturns a previous ruling that favored his extradition to the United States, spotlighting the intricate web of legal challenges Do Kwon faces across multiple jurisdictions.
Furthermore, South Korean regulators have also recently launched an investigation into Worldcoin’s handling of private and sensitive data.
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