Cryptocurrencies: Not legal tender
In South Korea, cryptocurrencies are not considered legal tender and exchanges, while legal, are part of a closely-monitored regulatory system. Cryptocurrency taxation in South Korea is a grey area: since they are considered neither currency nor financial assets, cryptocurrency transactions are currently tax free, but the Ministry of Strategy and Finance is planning to announce a taxation framework in 2018, with taxation expected to be enforced in 2019.
Cryptocurrency exchange regulations in South Korea are strict and involve government registration and other measures overseen by the South Korean Financial Supervisory Service (FSS). Although a rumored ban never materialized, in 2017, the South Korean government prohibited the use of anonymous accounts in cryptocurrency trading, and also banned local financial institutes from hosting trades of Bitcoin Futures. In 2018, the Financial Services Commission (FSC) imposed tighter reporting obligations on banks with accounts held by crypto exchanges.
In early 2018, South Korea’s Finance Minister revealed the government was planning to introduce more robust cryptocurrency regulations – but there are signs that the authorities’ stance towards the issue may be softening. In May 2018, Yoon Suk-heun took over leadership of the FSS: Yoon has spoken of the “positive aspects” of cryptocurrencies, and the need for exchanges to serve investors’ interests while complying with the regulation.