The new South Korea-based cryptocurrency exchange, Bithumb Korea, recently obtained a major legal victory against the country’s taxation department. The Seoul High Court confirmed that Bithumb’s virtual assets cannot be categorized as inventories. The dispute originated from Bithumb’s adjustment of its virtual asset valuation method between 2014 and 2017. South Korea’s tax authorities said that this contributed to the under-reporting of profits and could be an evasion of taxes. However, the court supported Bithumb and stated that no special rules existed for such transactions. The ruling agreed that Bithumb mainly acts as a broker and not as an owner of assets in the context of reporting using the assessment method.
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Court Ruling Highlights Regulatory Tensions
This legal victory comes when South Korea intensifies its regulatory scrutiny of the cryptocurrency sector. To this end, the nation is assessing about 600 virtual assets against the newly set standards. Those resources that do not satisfy these requirements are in a position to be delisted. Exchanges like Upbit, Bithumb, Coinone, Korbit, and Gopax, are already assessing their offerings against the established regulations.
The court’s decision concerning the tax regime applicable to virtual assets could be deemed significant beyond merely the four corners of the provision. It erodes the position of the tax authorities and determines how virtual assets have to be handled within the legal framework of South Korea.
However, the ruling does not decrease the expectations of the crypto industry in South Korea any less. The constant cleansing of non-compliant assets and the legal issues that Bithumb and other such platforms have faced are clear indications of the rising regulations in the country. Nevertheless, this victory for Bithumb also shows that the situation in South Korea regarding crypto exchanges is far from straightforward anymore.
Conclusion
Bithumb Korea’s court win is a significant milestone in categorizing and regulating virtual assets in the country. However, as the industry’s regulations become increasingly stringent, the need to adhere to these changes cannot be overemphasized. This judgment offers a limited reprieve for the bourses but a clear sign of future pains that the crypto exchanges will face in the country.
Also Read: South Korea Faces Another Setback in Cryptocurrency Tax Plans
