South Korea’s Financial Supervisory Service (FSS) — the country’s integrated financial regulator that examines and supervises financial institutions — has decided to analyze the risk characteristics of domestic virtual assets in order to mitigate risks in the virtual asset market in the wake of the recent Terra UST/LUNA failure. In order to analyze the risk characteristics of domestic virtual assets, the FSS plans to begin by entrusting research services to institutions with public credibility.
According to the Korea Herald, the government’s decision to appoint the FSS as the organization responsible for virtual assets follows months of deliberation over who should oversee the industry. In the future, the FSS will oversee previously enacted measures such as the act on “Reporting and Using Specified Financial Transaction Information,” which restricts cryptocurrency exchanges.
According to NewsPim, the country’s ruling party recently announced the formation of a new Digital Asset Committee in early June in response to rumors that Terraform Labs co-founder Do Kwon was in legal trouble in South Korea.
According to the local report, the committee will serve as a watchdog over the crypto industry, preparing and overseeing policies until the upcoming “Framework Act for Digital Assets” is enacted and a formal government entity dedicated to crypto is established.
In an effort to improve policy effectiveness by streamlining crypto oversight efforts, the committee will report to the FSS.
In addition, the government recently reaffirmed its intention to impose and collect a 20 percent income tax on gains derived from cryptocurrency transactions beginning in 2019. Those earning over 25 million won ($22,400 or approximately Rs. 17.4 lakh) in 2022 will be taxed.
To increase the transparency of cryptocurrency exchanges, the government decided to prohibit cryptocurrency operators from engaging in transactions or providing brokerage services.