South Korean Political Parties Promise Crypto Incentives Ahead of Parliamentary Elections

Leading political parties in South Korea are making bold promises to attract crypto-savvy voters ahead of the country’s upcoming parliamentary elections. The opposition Democratic Party has pledged to lift restrictions on domestic and international exchange-traded funds (ETFs) that directly hold crypto tokens, including United States-based spot Bitcoin (BTC) ETFs. This move comes after the approval of Bitcoin ETFs in January, which raised concerns from South Korea’s securities regulator about potential violations of domestic laws.

Hwanseok Choi, a member of the Democratic Party, stated that they are committed to allowing the trading of ETFs, whether domestic or overseas, as outlined in the party’s manifesto. On the other hand, President Yoon Suk Yeol’s People Power Party has promised to postpone taxes on profits from digital assets, which were set to be implemented in 2025. These promises are aimed at appealing to the growing number of South Koreans involved in cryptocurrency trading, with nearly six million individuals trading crypto via registered exchanges in the first half of 2023, representing 10% of the country’s population.

Data from the Korea Securities Depository reveals that crypto users in South Korea have invested over $200 million in shares of U.S.-listed firm MicroStrategy, known for its significant exposure to Bitcoin. Some analysts have even labeled MicroStrategy as essentially a leveraged Bitcoin ETF due to its heavy reliance on the cryptocurrency.

Despite the political parties’ promises to support the crypto industry, South Koreans are bracing for stricter regulations on digital assets. Local financial authorities are set to introduce new rules for token listings on centralized exchanges in the coming weeks. Reports suggest that domestic exchanges will be prohibited from listing digital assets involved in hacking incidents until the root causes are determined. Additionally, foreign digital assets will only be listed on domestic exchanges if a white paper or technical manual is available for local investors.

The upcoming Virtual Asset Users Protection Act in South Korea will also impose restrictions on the use of undisclosed important information about crypto, market manipulation, and illegal trading. The law is scheduled to come into effect on July 19, with the government issuing updates in February that include significant fines and criminal penalties for violations, such as imprisonment or fines up to five times the amount of illegal profits.

As the country gears up for its parliamentary elections, the intersection of politics and cryptocurrency is becoming increasingly prominent in South Korea, with parties vying for the support of the growing crypto community through promises of regulatory changes and tax incentives. It remains to be seen how these pledges will impact the outcome of the elections and the future of the crypto industry in the country.