South Korea, where more than 10% of the population holds crypto, elected its first crypto-friendly president Yoon Suk-yeol, who has made promises to institutionalize and advance the local industry.
Both president-elect Yoon of the right-wing People’s Power Party’s and his main election rival, ruling Democratic Party’s Lee Jae-myung, made pro-crypto promises to win over the votes of a younger, crypto-savvy generation, during their respective election campaigns in what local experts coined Asia’s first crypto election.
“It’s the result of the past government continuously making negative policies stifling the real, large-scale presence of the virtual asset market,” Park Sung-jun, head of Dongguk University’s blockchain research center and CEO of Andus, told Forkast.
Current president Moon Jae-in’s outgoing administration maintained an ambiguous and somewhat critical stance on cryptocurrency investments, which peeved younger investors.
Experts in South Korea agree that having a pro-crypto president could ignite South Korea’s crypto industry.
Return of ICOs, tax revamp, and investor protection
Yoon, a former public prosecutor, has provided an agenda of campaign promises regarding cryptocurrencies, including placing crypto on the same tax-free threshold as capital gains from stocks, which is 20% from 50 million won (US$40,469).
“I look forward to seeing the new president lead market growth through mixing regulations in a new direction of policies, where investments in cryptocurrencies are recognized as real investment measures, just like stock investments,” 27-year-old crypto investor Chung Seung-mo told Forkast.
Beginning in 2023, South Korea is planning to levy a 20% tax on profits from digital assets over an annual amount of 2.5 million won (US$2,023.47). The tax levy was initially intended to kick off in 2022, but investor backlash prompted the National Assembly to delay the plans for a year.
To provide legal protection for the industry, Yoon pledged to establish what he calls the Basic Digital Asset Law, which will place emphasis on recovery of funds lost in illegal trades and scams.
In a rare proposal even for the global crypto industry, Yoon wants South Korea to take investor protection a step further with insurance policies for unexpected loss of assets from hacks and system errors, a source of mounting frustration for investors around the world, especially in the rugpull-infested decentralized finance (DeFi) ecosystem.
“[In Korea], the DeFi market has become very active and the NFT market is very hot. The decentralized autonomous organization (DAO) market is also waking up,” Kim Hyoung-joong, president of the Korea Society of Fintech Blockchain, told Forkast.
Yoon also proposed re-approving initial coin offerings (ICOs) in the form of initial exchange offerings, where funding will be supervised by licensed digital assets exchanges. ICOs have been banned by the local financial regulator since 2017 due speculation and rising scams.
However, some believe ICOs are not as significant today in Korea as they used to be. “Right now in Korea, there isn’t really a reason to do ICOs anymore,” Kim said. “These days, by selling one NFT, you can collect more money than ICOs.”
Still no place for play-to-earn
The president-elect in his campaign discussed establishing a government agency dedicated to crypto and non-fungible tokens (NFTs). While institutionalization of NFTs remained on Yoon’s to-do list, the plan to set up an agency did not appear on the final copy of campaign promises.
Another promise that did not make the final cut was his reversing the ban on play-to-earn (P2E) gaming.
Lee Young-whan, founder and CEO of blockchain startup Ubuntu Custody says he has high hopes for the new administration. Lee told Forkast that many members of the blockchain sector were among Yoon’s campaign supporters.
“The regulators often make restrictions with no legal basis, and they stifle the [crypto] industry, which should be abolished,” Lee said. “And people who understand this issue are among [Yoon’s] campaign.”