Just in a day’s time after South Korea announced its plans to introduce and collect income tax on earning made through crypto investments, the cryptocurrency market has entered a heavy correction.
At the press time, the available data on the CoinMarketCap shows that almost all of the top fifteen cryptocurrencies have corrected by over 10% as the overall cryptocurrency market cap slips down to $514 billion.
The price of Bitcoin too has slipped below $11000 and is currently trading for $10,640. Bitcoin’s arch-rival Ethereum too has corrected by 10.50% and has moved below the psychologically key level of $1000. At the press time, Ripple too is seen correcting by over 9% and is currently trading at $1.28, according to the data from CoinMarketCap.
Yesterday, the Korean government announced a tax of 24.2% on Income generated through crypto investments, for local exchanges operating in the country. Under the existing laws for Income Tax in South Korea, local corporations are asked to pay 2.2 percent of local income tax and 22 percent of corporate income tax on any income over 20 billion won (US$18.7 million).
An official from the Ministry of Strategy and Finance said that cryptocurrency exchanges are required to pay local tax on income earned last year by end of April while the corporate tax on income earned by end of March.
Over the years, South Korea has emerged as one of the most dominant countries in terms of cryptocurrency trading. Reports show that South Korea’s ‘won’ alone contributes to 4 percent of trading volumes in the crypto markets which is largely dominated by the Japanese Yen and the U.S. Dollar.
Cryptocurrency markets are showing sideways momentum since the past two weeks as a lot of uncertainty has steamed out of South Korea owing to regulatory measures planned by the government. With investor participation growing to record high in the crypto markets in the past few months, the Korean government has been finding ways to bring control on the crypto mania.
The tax authorities of Korea have expressed concerns about malicious activities like money laundering and tax evasion and as a result, it has asked exchanges and investors to stop trading from virtual accounts but rather use their real names linked with their bank accounts. The government has also imposed heavy fines for the ones found trading with anonymous virtual accounts.
Moreover, ten days back, the government also announced a possibility of a ban on crypto trading causing huge fear, uncertainty, and doubt within the investor community. However, after a heavy backlash, the government has to reconsider this and the presidential office announced that such a decision is yet “not finalized“.
Following this, there were also rumors about involvement by the government official is causing FUD and a possibility of insider trading is also been currently investigated by the South Korean Financial Supervisory Service (FSS). Moreover, to maintain transparency in the government investigation, a bill has also been passed asking the public officials to disclose and declare their crypto investments.
It seems that unless and until a proper stand on how South Korea wishes to control crypto operations is made, the market might see some more correction in the near future.