South Korea’s Financial Services Commission issued a directive that bans securities firms from acting as intermediaries for bitcoin futures transactions, according to industry sources cited by Business Korea.
The Financial Services Commission of Korea has reportedly banned financial institutions from offering bitcoin futures contracts. The Korean regulator does not recognize bitcoin as an underlying asset of derivative products. Therefore, the cryptocurrency cannot be subjected to futures trading.
Per Business Korea, securities firms planning to introduce bitcoin futures trading to their clients have halted the process. eBest Investment & Securities Co. and Shinhan Financial Investment Co. have both canceled bitcoin futures seminars initially scheduled for December 14 and 15.
“It is the first time for the South Korean authorities to ban trading a specific item,” an official from the securities industry told Business Korea.
In other news, South Korea’s National Tax Service (NTS) has unveiled plans to impose an income tax on cryptocurrencies at the 2017 National Tax Administration Forum on Tuesday, as reported by Korea Times. Additionally, NTS is currently analyzing ways to make it compulsory for cryptocurrency exchanges to hand over their users’ transaction data.
“We will pursue taxation on virtual currencies such as bitcoin. Since virtual currency is a kind of property such as real estate or securities, it should be taxed according to the principle that there is a tax on income,” a National Tax Service official told Korea Times.
The proposed measures cannot be fully enforced unless the agency finds a way to collect transaction data from cryptocurrency exchanges.
“We are discussing with the related ministries, such as the Ministry of Strategy and Finance, how to make it compulsory for virtual currency exchanges to submit transaction data,” the NTS official said.
The NTS also considers amending the country’s existing tax laws to add transfer income tax on profits generated from cryptocurrency trading.
“We have not progressed enough to put it in next year’s tax law revision,” government officials told Etoday.
South Korea bans bitcoin futures trading – Image source: KoreaNet / Flickr