S Korean Gov’t To Take Bigger Slice of Exchange Profits
The South Korean government has confirmed that it will move to strip cryptocurrency exchanges of the same sort of tax breaks and business incentives it offers to other small- and medium-sized businesses in the country.
As previously reported on Cryptonews.com, the government made its initial decision to remove cryptocurrency-related companies from its list of “venture companies” last month. However, per media outlet Business Post, the Ministry for Small- and Medium-sized Businesses has now officially confirmed that it will seek to amend the Promotion of Venture Businesses Act early this week, and could have its measures rubber-stamped by the legislative as early as September 4.
The ministry will also remove companies that provide brokerage services “based on blockchain technology” from its list of venture companies.
If signed into law, the move would be devastating news for exchanges and brokerages, who had until now enjoyed corporate, income and property tax reductions of up to 50%, as well as 75% reductions on acquisition tax bills. Venture companies also have to meet less stringent criteria if they wish to be listed on the KOSDAQ, South Korea’s biggest stock index. They are also eligible for a range of government-issued point schemes.
Per Business Post, the ministry stated that cryptocurrency exchange platforms and brokerages are enabling “illegal activities such as speculation, money laundering and hacking attacks.”
In the first half of this year, large South Korean exchanges posted combined net profits of just under USD 89 million, as reported.
For example, a financial report from one of market leader Bithumb’s major shareholders revealed that the exchange has already accrued some USD 35 million in profits so far this year – despite having been hit with a triple blow this year of a major hack, tumbling prices and hefty tax bills.
However, Bithumb is unlikely to exceed its record-breaking USD 380 million net profit haul of 2017.