Korea to Start Taxing Crypto Gifts and Inheritances in 2022

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The Korean National Tax Service has announced that gifted or inherited crypto assets will be taxed under existing provisions, at a rate of between 10 and 50 percent, depending on their value. 

Korea to Tax Crypto Gifts and Inheritance 

Korean citizens will have to pay a new tax on crypto from 2022.

Local news agencies reported Tuesday that the Korean National Tax Service will levy a new crypto tax in 2022 targeting assets received as a gift or inheritance. 

Under the new provisions, crypto gifts and inheritances will be taxed in line with other gifted or inherited assets at a rate of between 10 and 50 percent, depending on their total value. Authorities state that the average daily price measured one month before and after the date of transfer will be used to calculate the correct amount of tax to be paid. 

The National Tax Service’s announcement listed four virtual asset providers—Dunamu, Bithumb Korea, Korbit, and Coinone—that will need to enforce the new tax provisions in the next year. 

This year, crypto regulations in Korea have tightened, but not without some pushback. At the start of December, lawmakers voted to push back the introduction of a more general 20% tax on crypto gains over the threshold of 2.5 million KRW ($2,099). The crypto gains tax is now set to come into effect in 2023.

Elsewhere, Korean crypto exchanges are changing their policies to help them comply with the new regulations surrounding digital assets. Earlier this week, the country’s third-largest exchange, Coinone, announced plans to block withdrawals to unverified external wallets as part of its efforts to crack down on illegal crypto activities such as money laundering. 

Disclosure: At the time of writing this feature, the author owned ETH and several other cryptocurrencies. 

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30-somethings led crypto purchases at South Korean exchanges in 2021

Crypto users between 30-39 years old in South Korea are reportedly the demographic with the most deposits on major exchanges in the country.

According to a Sunday report from the Yonhap News Agency, South Korean residents in their 30s deposited roughly 2.2 trillion KRW — $1.9 billion at the time of publication — to crypto exchanges Upbit, Bithumb, Coinone, and Korbit by the end of the second quarter of 2021. Teenagers in the country represented the group with the fewest deposits at $3.4 million, but this still was a more than 400% increase compared to the $824,000 those under 20 years old deposited in Q1 2021.

“All age groups are investing in virtual assets,” said Doo-Hyun Yoon, a member of the National Assembly’s Political Affairs Committee. “The government needs to be more careful in setting up policy on virtual assets, including paying special attention to the position of young investors.”

Upbit users accounted for the majority of the deposits with 3.5 billion KRW, followed by Bithumb and Coinone. This month, Upbit reportedly became one of the first South Korean crypto exchanges to register with the country’s regulators — the Financial Services Commission announced earlier this year local crypto trading platforms would be required to register as digital asset service providers before Sept. 24.

Related: South Korean FSC denies plans to shut down 11 crypto exchanges

As major crypto exchanges work to meet this deadline, smaller ones have reportedly been considering suing the South Korean government over its alleged failure to to take responsibility for excessive regulatory pressure. The new regulations allow authorities to impose a fine of up to 50 million KRW on exchanges not in compliance or have their operators face up to five years in prison.