South Korea’s Government is Reportedly Planning to Hit Cryptocurrency Exchanges with Tax Bills

Taxation is not the only tool the government is deploying. All exchanges are now required to share user transaction data with banks. This will give authorities direct access to trading records. The finance ministry expects to introduce this system by late January or early February.

These actions arrive as the cryptocurrency market cools. Bitcoin touched nearly $20,000 last month before a sharp selloff sent prices lower across the board. Bitcoin, ethereum, ripple, and litecoin have all lost significant value since that peak.

South Korea's government has escalated its approach well beyond taxation. The country has blocked foreign investors from using local exchanges. Korbit, a major platform, is shutting down current accounts this month to implement identity-verified accounts and bar foreign deposits.

Government officials are now discussing far more drastic measures. Financial regulators said they are weighing whether to shut down all cryptocurrency exchanges operating in the country. The justice ministry has begun preparing legislation that would ban cryptocurrency trading outright.

Not all government voices align on this course. Kim Sang-jo, chair of South Korea's Fair Trade Commission, expressed skepticism about shutting down exchanges. During a radio appearance, he said such action would not be realistic. The government lacks the legal authority to shut down exchanges under current law, he argued.

The pressure on cryptocurrency markets extends globally, and Bitcoin's price reflects it. The digital currency has fallen from recent highs and trades at just over $10,800, according to CoinMarketCap.