The South Korean government plans to tax capital gains on cryptocurrency transactions. A Dec. 9 report from The Korea Times reveals that a revised bill to introduce the measure will be drawn up by the country’s Ministry of Economy and Finance by the first half of 2020.

In parallel, the Korean National Assembly is in the process of advancing a related bill aimed at increasing transparency in cryptocurrency trading. If passed, the new regulations would come into effect one year after the Assembly’s plenary session.

While the government’s capital gains bill will reportedly go ahead regardless of related legislation, The Korea Times notes that a more adequate definition of cryptocurrencies and digital assets will be required to provide clarity for the government’s interventions.

Among the matters to be clarified is the question of whether crypto-related gains are to be deemed similar to gains in stock trading or real estate transactions.

To implement its taxation plans, the government could therefore need to obtain access to trading records on cryptocurrency exchanges — a practice already underway in countries such as the United States.

South Korea’s anti money laundering rules

A new bill, namely, “Act on Reporting and Use of Certain Financial Transaction Information,” was recently proposed. If the bill is passed, banks will be required to create cryptocurrency exchange accounts under real names.

In doing so, the government is forcing crypto exchanges to follow the same rules applied to crypto traders. Rules such as Know Your Customer (KYC), and other anti-money laundering laws transitional banks and financial institutions must adhere to.

Under the new bill, cryptocurrency exchanges will be regulated by the Financial Services Commission; South Korea watchdog. The country will also release a centralized cryptocurrency licensing system that was previously recommended by South Korea’s Financial Action Task Force (FATF).

South Korea’s most popular cryptoccurency exchange, Upbit, own and operated by SK’s tech giant Kakao, lsat month reported that 342,000 ETH coins were stolen from the exchange.

The ETH coins disappeared while the developers were moving crypto assets from hot to cold crypto storage and vice versa.  Some from the crypto community thought the theft was an inside job. Upbit’s executives promised to refund the stolen Ether tokens using the company’s reserved funds.

What are you thoughts on South Korea’s proposed measures to tax cryptocurrency transactions as capital gain?