South Korea’s crypto community will soon face strict reporting requirements for all crypto transactions, with the country’s National Assembly currently debating whether to adopt the rules.
Arguments against the proposed KTS rule were brought before the Political Committee of South Korean lawmakers on November 16, with lawmakers and industry experts opposed to the law.
When the KTS rule goes into effect, it would require companies receiving crypto assets to verify and report the name of the issuer and its location. In the case of business-to-business transactions, the legal form and the number of employees of the issuer must also be reported.
Choi Hwa-In of the Financial Supervisory Service (FSS) warned that the local blockchain industry could be “severely restricted” if the proposal is accepted. Attorney Yoon Jong-soo later pointed out that as cryptocurrencies become more popular and accepted, it is becoming increasingly difficult to assume that senders will provide the necessary information to identify themselves.
The KTS rule also requires crypto depositors from outside South Korea to register with the Financial Services Commission (FSC), the country’s financial regulatory agency. These rules could result in an initial failure of all crypto transactions in the country until the parties involved can abide by them, although an extension is likely to be introduced along the way.
The rule was proposed through a series of bills by Kim Byung-wook of the Democratic Majority Party and Yoon Chang-hyeon of the People’s Power Party on October 28th.
Today’s hearing in the National Assembly comes after a long discussion on regulating cryptocurrency for South Korean lawmakers this year.
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Debate over whether a tax on income from cryptocurrencies will be introduced for South Koreans as planned from January 2022. Some lawmakers have proposed tax deferral in the face of fierce opposition from Finance Minister Hong Nam-ki.