Overview of the Recent Developments in South Korea’s Crypto Sector
In a significant shift for the South Korean cryptocurrency landscape, lawmakers have agreed to postpone the introduction of crypto tax by two years. Initially slated for implementation in January 2025, the new timeline will now see the tax launched in 2027, following heated negotiations within the National Assembly.
Impact on Crypto-Related Stocks
The announcement has had an immediate positive effect on crypto-related stocks in South Korea. Reports from the Gangwon Ilbo indicated that on the morning of December 2, stock prices for companies involved in the crypto space surged as a direct response to the legislative developments over the weekend.
As illustrated in recent trading data, Hanwha Investment & Securities, which has significant investments in Dunamu, the operator of Upbit, experienced notable stock price increases. Hanwha Investment & Securities saw shares rise by 8%, while its preferred stock increased by 11% shortly after the market opened. However, these gains were short-lived, with prices falling back slightly later in the day.
Performance of Major Players
Woori Technology Investment, another shareholder in Dunamu, also recorded an increase of 8.66%. Both companies are key players in the IT investment sector, capitalizing on the burgeoning crypto market. T Scientific, which has stakes in Bithumb, another major crypto exchange, experienced modest growth of 1.66%. T Scientific is known for its mobile services and previously invested in the Hanbitco exchange.
Meanwhile, Galaxia Moneytree, a financial services provider listed on the Korea Exchange, encountered a tumultuous trading day. The company initially saw an impressive 8% surge in share prices but then faced a stark decline, ending the day at a -2% loss. This volatility mirrors the fluctuating sentiments surrounding the crypto market in South Korea.
The State of Initial Public Offerings (IPOs) in the Crypto Sector
Currently, no South Korean crypto firm has successfully launched an initial public offering on the Korea Exchange. Bithumb previously halted its IPO plans to focus on potential listings in the U.S. Similarly, K Bank, a partner of Upbit, recent withdrew its IPO bid but hinted at the possibility of attempting to go public for a third time early next year.
The delay in the crypto tax launch has created a more favorable environment for these firms, as the uncertainty surrounding taxation can significantly impact investor confidence and market strategies.
The Legislative Backdrop
The critical decision to delay the crypto tax was made after a lengthy standoff among lawmakers. On December 1, members of the Democratic Party, which holds the majority in the National Assembly, ultimately conceded to government pressure to push back the tax’s implementation. Earlier, this party had proposed a bill aimed at raising the annual tax threshold for cryptocurrency to align with that of stock market investments. However, their proposal failed to advance during the subcommittee discussions, leading to the current agreement.
As the South Korean government navigates regulation in the rapidly evolving crypto landscape, the dynamics of investment and market sentiment continue to be influenced significantly by legislative actions and perceived risks within the sector.