South Korea’s major political parties are promising crypto-related incentives to secure voter support ahead of the upcoming parliamentary elections.
according to According to a Bloomberg report on April 5, the opposition Democratic Party has vowed to remove restrictions on domestic and foreign exchange traded funds (ETFs) that directly hold virtual currency tokens, including US Bitcoin ETFs. Following the approval of Bitcoin ETFs in January, South Korea’s securities regulator warned that domestic distribution of these ETFs could violate domestic laws.
Choi Hwang-seok of the Democratic Party of Japan cited the group’s manifesto and told Bloomberg, “We intend to allow ETFs both domestically and internationally.”
President Yoon Seok-yeol’s People’s Power Party also promised to postpone the tax on digital asset profits, scheduled to go into effect in 2025, in hopes of capitalizing on crypto voters.
According to government statistics, nearly 6 million South Koreans traded cryptocurrencies through registered exchanges in the first half of 2023, representing 10% of the country’s population. According to official disclosures, a total of 7% of election candidates own cryptocurrencies.
Related: Crypto.com expands in South Korea despite increased regulatory scrutiny
Cryptocurrency users have invested more than $200 million in shares of U.S.-listed company MicroStrategy (MRST), according to data from the Korea Securities Depository Center. The company’s large exposure to Bitcoin has led some analysts to classify it as “essentially a leveraged Bitcoin ETF.”
Despite promises from politicians, South Koreans are bracing for tighter regulations on crypto assets. Local financial authorities are expected to announce new rules for listing tokens on centralized exchanges in the coming weeks.
Domestic exchanges will be prohibited from listing digital assets affected by the hacking incident until the root cause is determined, local media reports said. Additionally, foreign digital assets will only be listed on domestic exchanges if a white paper or technical manual is available for domestic investors.
Furthermore, South Korea’s upcoming Virtual Asset User Protection Act prohibits the use of “non-public material information” regarding cryptocurrencies, market manipulation, and illegal transactions. The Virtual Currency Law will come into effect on July 19, 2024. The government issued an updated version of the law in February, imposing hefty fines and criminal penalties for violations, including imprisonment for a term of one year or more or three fines. The amount of illegal profits reaches five times.
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