South Korea to establish crypto framework by 2024

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South Korea to establish crypto framework by 2024

The administration of the newly-elected President of South Korea, Yoon Suk-yeol, wastes no time in its drive to maintain the country’s stature as a center for innovation as it hopes to roll out comprehensive crypto legislation in 2023 and institutionalize the sector by 2024.

On May 11, South Korean newspaper Kukmin, citing a leaked governmental document, reported that the administration is looking to introduce the “Digital Asset Basic Act” (DABA) in the next year and to follow it up with more legislation by 2024. The bill is part of the 110 policy aims the new President introduced earlier this year.

The bill will be drafted in accordance with international norms and will rely on the experience of the world’s largest economies as the local Financial Stability Board (FSB) will cooperate with the Basel-based Bank for International Settlements (BIS) and the U.S. and E.U. regulators.

While there aren’t many details, what is known looks quite optimistic for the industry. The government plans to expand the existing infrastructure for crypto-fiat transactions, allowing more banks to create their own platforms for fiat-crypto exchange. Currently, there are only 4 banks in the country that have this capacity. Also, the South Korean authorities expect to institutionalize nonfungible tokens (NFTs) and introduce a regulator framework for ICOs.

The issuance of a central bank digital currency (CBDC) is also on the table. The Bank of Korea completed the first phase of its mock testing in January 2022.

The Yoon administration already confirmed the validity of the leaked document, noting, though, that this draft is not the final one.

On May 3, Yoon Suk-yeol announced he would push to defer taxation on crypto investment gains until the Digital Asset Basic Act is enacted, which means at least until 2024. Under the new crypto taxation rules, the government will levy a 20% tax on crypto gains above $2,100 per year.