South Korea’s next presidential election is approaching — it will take place March 9 this year. As commonly occurs at the end of a presidency, many voters look for change, and in South Korea perhaps even more strongly with regard to cryptocurrency, which has become increasingly popular for many Koreans.
In fact, in South Korea — which has one of the highest crypto adoption rates in the world — crypto laws and regulations are emerging as a presidential elections campaign issue.
Here is a look at the four major presidential candidates — Lee Jae-myung, Yoon Seok-youl, Sim Sang-jung and Ahn Cheol-soo — and their stances on crypto.
The 2021 South Korean by-elections held on April 7 showed a great change in the country’s political dynamic. It revealed a loss of support from people in their 20s and 30s who were once loyal to the current President Moon Jae-in and the Democratic Party. At the by-election, the conservative People Power candidate Oh Se-hoon won the seat of Seoul mayor with 57.5% of votes, while Democratic candidate Park Young-sun gathered 39.2%. Just last year, at the 2020 legislative election, 56.4% of voters in their 20s and 61.1% in their 30s supported the Democratic Party.
The increasing difficulty in finding jobs and rising real estate prices are deemed two of the main reasons why people in their 20s and 30s turned their backs on the current administration, which also explains why people in their 20s and 30s have become so immersed in blockchain and crypto. The number of crypto investors in their 20s and 30s made up nearly 60% of the total number of investors in Korea’s four major exchanges in the first quarter of this year, according to data from the Financial Services Commission. The political agenda on virtual assets is emerging as an important variable in the upcoming election that will determine the votes of people in their 20s and 30s.
The new political influence of crypto investors in their 20s and 30s was well displayed in the recent delay of the taxation plan on virtual asset gains, where a 20% levy on crypto originally set to take place this month was pushed back one year by the National Assembly, after investors consistently protested against the policy.
Lee Jae-myung, candidate for the ruling Democratic Party of Korea (DPK), is the candidate who is most active in endorsing blockchain technology in his campaign. He proclaimed that cryptocurrencies have already become an “undeniable reality” and an integral part of the lives of South Korean citizens, where crypto is “recognized by many people as a means of trading and storing value.” As part of his presidential campaign, Lee pushed for the delay on taxes on crypto gains.
Lee also thinks that a central bank digital currency (CBDC) and private cryptocurrencies can coexist, for cryptocurrencies are a more seamless, less expensive and time-saving method for sending remittances overseas compared to the existing financial system.
When asked his opinion on whether the government should intervene in seigniorage — the difference between the denomination and production and distribution costs — that occurs in cryptocurrencies. The candidate said individuals making seigniorage profits when issuing virtual currencies is not justifiable, and that there should be a method for the public to share the seigniorage.
The same line of thought applied to his plan to redistribute unearned profit from large-scale real estate and housing developments to every Korean citizen in the form of cryptocurrencies. His goal is to stop certain corrupt powers from devouring the profit. His plans go further on, believing that a new virtual asset market will naturally form once every citizen receives the crypto and starts trading them.
However, this proposal has been discredited by many as being unrealistic. “We can receive the redistribution of unearned profits in the form of government subsidies,” said Park Sun-young, professor at Dongguk University’s economics department. “It seems he added cryptocurrencies into his plan to promote his new promise, but in a country with well-developed electronic financial systems, there is no need to use cryptocurrencies for that.”
Lee Byung-uk, professor of digital finance at Seoul School of Integrated Sciences & Technologies (aSSIST), told Forkast.News that once the government reviews the plan on a working level, it will realize that the feasibility of carrying out the plan is quite low. “It seems it is a decision based on essentially wrong assumptions viewed from surface level,” he said.
Meanwhile, it is reported that Lee is considering a plan to set up a government agency dedicated to supervising the virtual asset market for his presidential campaign, which was received well among lawmakers and experts. The agency, if constructed, would put investor protection as top priority. Lee argues that virtual assets should be included within the institutional framework as they are highly speculative saying that “virtual assets have a strong permeability and can be used for fraud, crime, money laundering, etc.”
Just last week, Lee announced that he is planning to raise election funds on a blockchain-based digital platform and distribute NFTs (non-fungible tokens) to contributors of his crowdfund which include images of his photos and policies. Unlike donation, a crowdfunding participant lends money and later receives it back after the campaign is over — Lee’s committee plans to make NFTs the binding agreement between the participant and the committee.
The campaign committee says the DPK party will become the world’s first political party to issue NFTs for fundraising in a presidential election, while it anticipates the wide participation of the crypto-savvy voters in their 20s and 30s.
A recent survey of 1,010 adults showed that Lee is currently the frontrunner in the electoral race, with 39.4%, while Yoon Seok-youl, candidate for opposition People Power Party, runs behind near 10% with 29.9% of support in a hypothetical multi-candidate race. Several other recently held surveys showed similar results.
Yoon Seok-youl is running for the opposing conservative People Power Party, and is currently the runner-up in the election surveys. Like Lee, Yoon views blockchain and cryptocurrencies in a positive light, but has yet to include bold crypto promises into his campaign.
He also endorsed the delay in crypto gains tax, where he said he believes the taxation should be deferred until the policies on virtual assets are sufficiently built. He insisted that Korea benchmarks the U.S. stance on cryptocurrencies, mentioning how the country accepts cryptocurrencies even though the U.S. dollar remains a key currency of the world.
Yoon said that blockchain technology has potential to create high-quality jobs, and urged the government to “prepare for the future in the digital economy, in line with the changing market and technology trends” in order to promote the blockchain industry. He also insisted that investor protection and prevention of crimes utilizing virtual assets should be readied.
Instead of making commitments around blockchain and cryptocurrencies, Yoon chose as issues loosening real estate restrictions and helping small businesses from the pandemic-induced recession.
Sim Sang-jung is the candidate for the minor progressive Justice Party, which has six seats in the 300-seat National Assembly.
Sim criticized Democratic Party candidate Lee Jae-myung on his advocacy for pushing back the taxation on virtual asset gains. On her Facebook page, Sim wrote: “Where there is income, there must naturally be taxation,” using the same quote that finance minister Hong Nam-ki used when he stood by the 20% tax plan on crypto. Sim noted that the U.S. already levies gains from cryptocurrencies by classifying virtual asset transactions as investment assets, and that crypto tax in South Korea has been under discussion since 2017, arguing there is no more room for delay.
Meanwhile, Sim Sang-jung pushes a four-day workweek in her presidential campaign, announcing that South Korea is a time-impoverished country where people suffer from poor work-life balance.
Ahn Cheol-soo represents The People’s Party, which is a centrist conservatism party he founded, with currently three seats in the National Assembly. Ahn, a former medical doctor turned developer of computer vaccine turned politician, was the last candidate to announce his run for presidency on Nov. 1, this year.
Despite not including any policies on virtual assets in his campaign, Ahn has been vocal in the past about blockchain and cryptocurrencies as a former IT developer himself. In June, Ahn stressed the need for a clearer listing standard and management of cryptocurrencies to bring more transparency to the virtual asset market. He further explained that information and analysis on virtual assets need to be available for investors clearly and fairly.
Ahn revealed that he gained interest in blockchain technology from 2015, and aimed to construct The People’s Party based on blockchain technology to demonstrate a transparent political party, which he could not successfully pull off.
Ahn’s approval rating started to rise recently in surveys, surpassing 10% for the first time after announcing his run for presidency. Local media reports say many of Yoon’s previous supporters have migrated over to Ahn after the conservative party candidate’s scandal regarding his wife.
Many South Korean experts on blockchain and crypto agree the country needs to hold a more coherent stance on the technology. “The biggest problem is that the country still does not fully acknowledge cryptocurrencies, and the discourse on the new technology is mainly focused on regulating it,” said Park Sung-jun, head of Dongguk University’s blockchain research center and CEO of Andus Co., Ltd., in an interview with Forkast.News. “It is most important that [the new administration] recognizes the cryptocurrency industry as a new growth industry, and switch into well-balanced policies between regulation and promotion.”
Kim Hyoung-joong, president of Korea Society of Fintech Blockchain, told Forkast.News that “The [new] president and his officials will need to bear an open mind on virtual assets. Once the administration sets a clear goal of making Korea at the center of the new digital Wall Street, the rest of the problems will naturally be ironed out.”