South Korea has delivered a blow to the cryptocurrency industry, while also giving it a firm handshake. The cryptocurrency and blockchain industry will no longer be certified as venture firms, which means the industry loses some tax benefits and other financial incentives for domestic startups and small businesses. On the other hand the country is close to legalizing initial coin offering (ICO) and impose better crypto-related frameworks for the local market.
The Asian country is home to some of the biggest players in the crypto market. Exchanges like Upbit and Bithumb are still listed as ventures, but will lose this status near the end of the year. These companies will no longer benefit from a 75% cut in acquisition taxes, and instead see their income taxes doubling, as was reported by CCN.
Local lobby groups are worried. They fair a lack of innovation and even an exodus of crypto related companies. “The measure will discourage the industry as a whole,” several Korea lobby groups stated back in August.
Despite the harsh climate for crypto startups, the Korean government is on its way to develop a proper framework for ICOs. The success of the 1.7 billion dollar Telegram ICO, and the 4 billion dollar token sale of EOS, are proof that there’s wide interest in this form of investing.
“Regulation is not bad. Regulation is necessary, it is the only way to legitimize the market and allow investors to build trust towards the cryptocurrency market”, said Min Byung-Doo, chairman of Korea’s National Policy Committee and member of the governing Democratic party, to Coindesk Korea.
Currently the National Assembly is awaiting to approve or reject the country’s first crypto and blockchain related legislation. If approved, it would consider crypto exchanges on equal foot with regulated banks, while blockchain projects would become legitimate entities. Chairman Min Byung-Doo is at the forefront of all this. He wants to government to create a task force that will create a framework to ‘block fraud, speculation, money laundering and develop the block-chain industry’.