Reports are emerging that the government in South Korea is mulling a proposal to fine employees of cryptocurrency exchanges for trading in digital assets.
According to a report from local media outlet Yonhap News Agency on June 7, Korea is promoting a plan to impose a fine of not more than 100 million won ($90,000) on crypto exchange operators and employees. The penalties may be levied if employees are caught trading on their own exchanges.
The move follows a May 28 announcement by the government which stated that it would ban businesses, executives, and employees from trading virtual assets through their own exchanges.
The edict was made in order to prevent price manipulation by crypto exchange operators. South Korea is well known for its “Kimchi premium” in which the price of Bitcoin on local exchanges can be much higher than elsewhere in the world.
The report added that the Financial Services Commission (FSC) recently met with exchanges to explain the plan to amend the decree to include the fines for violation.
Crypto taxman cometh
In late May, the Korean government announced plans to begin levying a 20% tax on crypto transactions beginning in 2022. As reported by BeInCrypto, non-sales transfers of crypto asset ownership will be subject to “statutory gift and inheritance tax rates” of up to 50%.
South Korea’s finance minister, Hong Nam-ki has maintained his stance that crypto assets cannot be recognized as currency and that their traded market values cannot be guaranteed.
Also in late May, the South Korean central bank expressed the usual concerns and well-worn warnings that the trading of cryptocurrencies could place the entire country’s financial system at risk. This is no surprise considering most central banks are wary of the growing prevalence of a financial vehicle that they cannot control.
The changing landscape
New legislation that will force crypto exchanges to partner with banks to ensure legitimacy and provide the mandatory know-your-customer (KYC) requirements is due later this year.
Many crypto exchanges operating in the country are struggling to meet these ever increasing demands by regulators. The once crypto-friendly country appears to be taking a harsher approach to digital assets despite the huge demand for them from Korean traders and investors.
Koreans still want their digital currency fixes and, according to one report, many of the younger generations still see them as a “last chance of escape” from their current social status as trust in traditional investments dwindles.