Cautious Approach Toward Digital Assets

South Korea's Financial Services Commission (FSC) has taken a cautious stance on the idea of creating a national bitcoin reserve. FSC Chairman Kim Byung-hwan stated that such a move is currently "too distant," despite increasing calls for ensuring liquidity in digital assets.

According to a report by Newsprime, South Korea is closely observing the United States’ bullish stance on cryptocurrencies. Kim acknowledged that U.S. President-elect Donald Trump has a more favorable approach to cryptocurrencies compared to previous administrations.

Priority: Integrating Cryptocurrencies with Traditional Financial Systems

Kim emphasized that the primary focus is now on connecting the digital asset market with the existing financial system to establish a stable relationship. While South Korea is monitoring developments in the U.S., Kim noted that the country needs time to evaluate its next steps:
"We need to see what the U.S. does, but for now, this is a distant story," he said.

Kim also warned that more funds should flow into the stock market rather than the crypto market. He pointed out that trading volumes for virtual assets have already surpassed those of South Korea's stock indices, KOSPI and KOSDAQ.

Cryptocurrencies and Market Volatility

According to Kim, the cryptocurrency market is highly volatile, requiring strict monitoring.
"The prices of virtual assets are rising rapidly, and the market is extremely unstable, which necessitates a focus on unfair trading practices," he added.

Cryptocurrency Taxation Plans from 2025

South Korean regulators are taking steps to regulate the crypto market. The Democratic Party of Korea recently announced plans to introduce a 20% tax on cryptocurrency trading profits, starting in January 2025.

Key Points of the Proposed Taxation:

  • A 20% tax on cryptocurrency profits exceeding 50 million Korean won (approximately $35,668).

  • An additional 2% local tax on the same profits.

The initial proposal aimed to impose a 20% tax on profits over 2.5 million won (around $1,800). However, this faced opposition from major cryptocurrency exchanges, which warned of a potential decline in trading volumes.

Conclusion:
South Korea's FSC continues to adopt a conservative stance on digital assets. Plans for a bitcoin reserve remain on hold, as regulators focus on integrating cryptocurrencies with traditional financial systems and ensuring market security.

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