Previously we had heard that South Korean government raided some exchanges and were flirting with a crypto ban. However, the ban is unlikely as it seems like they are taxing exchanges instead.
The government said Monday it will collect up to 24.2 percent of corporate and local income taxes from South Korea’s cryptocurrency exchanges this year… South Korea is home to one of the world’s biggest private bitcoin exchanges, with more than 2 million people estimated to own some of the best-known digital currency. Under current laws, all corporations with income of over 20 billion won (US$18.7 million) are required to pay 22 percent and 2.2 percent of corporate and local income taxes on their income. … Bithumb, one of South Korea’s major cryptocurrency exchanges, is expected to pay about 60 billion won in corporate and local income taxes as its estimated earnings reached 317.6 billion won last year, according to Yujin Investment & Securities. Bithumb reported 49.23 billion won in earnings on 49.27 billion won of sales for the first seven months last year.
– Gov’t to collect 24.2 pct of taxes on income by virtual currency exchanges. English.yonhapnews.co.kr.
This news, like all such news of this type over the years, always ends up being the same thing. A ban or regulation is announced, everyone freaks out and the price of crypto drops, and then it turns out to be mundane (or at times even a sign that states are embracing cryptocurrency to some degree).
There isn’t much any one person can do to fight the FUD when it pours out of the media and makes headlines, but it’ll be worth keeping this in mind for the next time you hear “X country to ban crypto.”
When you hear news like that it can be smart to sell and re-enter after the panic, but that is only if you are going short. Those with long positions need to just sort of ignore the inevitable “X country to ban crypto” news. A handful of previous corrections were spurred on by news like this, and actual events have ended up being as bad as the initial reports about 0% of the time so far.
In other words, headlines like this are rooted in reality, but more-so they make for good clickbait and act as an excuse for bears to drop the market (which helps those who short crypto or want to re-enter with a lower position). Thus, we get a cascade effect.
The current crypto correction is partly a result of this cascade effect. It is however rooted in a bunch of little things like this stacked on top of each other. That has real power now, but how long that power will last given the lack of substance is questionable. History says corrections based on things that lack substance don’t last long (like the September correction), but corrections based on events that do have substance can last longer (like the correction after MtGox). This correction is lacking any substance beyond “we just had an epic rally before it,” and that is worth noting (as in this respect the events surrounding it are more like the September correction where a ban that wasn’t a ban and a previous rally led to the correction).
READ: CoinTelegraph’s S. Korea To Tax Crypto Exchanges 24.2 Percent, In Line With Existing Tax Policy… Oh no, not existing tax policy applied to a profitable business (which thereby legitimizes the business buy the way). Tyranny I tell you!
NOTE: Let’s be honest, after the epic rally the bad news Bitcoin bears wanted an excuse for crypto to go on sale. The shorts are loving this (those who make profit when Bitcoin and crypto in general goes down), thus they will tout ban headlines all day long. That is fine. But honestly this set of events (or similar ones) seem to happen over and over. It is getting old. See a list of historic corrections from 99bitcoins.com, notice how more than one of them involve news of a potential ban that never ended up being a thing (or a regulation that had no substantial effect in practice but was treated like the end of the world at the time). Notice how a few of these seem to follow a wave of new adoption that resulted in all time highs? It is not 1, being my point.
- Gov’t to collect 24.2 pct of taxes on income by virtual currency exchanges. English.yonhapnews.co.kr.