- South Korea‘s martial law declaration halts crypto sector reforms until political crisis resolves.
- Securities token offerings and corporate crypto accounts implementation delayed indefinitely.
- Crypto taxation postponed until 2027 following December 10 tax reform bill passage.
- Bitcoin prices on Upbit dropped 33% to â‚©88,266,000 following martial law announcement.
- Financial regulators shift focus to traditional markets amid political uncertainty.
South Korea‘s cryptocurrency regulatory reforms face indefinite delays following President Yoon Suk Yeol’s December 3 martial law declaration, marking the first such order since 1980 and triggering a political crisis that has redirected legislative priorities.
The National Assembly’s attention has shifted entirely to impeachment proceedings and budgetary matters, leaving key cryptocurrency initiatives in suspension. Two major reforms affected include the legalization of securities token offerings (STOs) and the introduction of real-name corporate crypto accounts.
Regulatory Timeline Disruption
The assembly managed to pass a significant tax reform bill on December 10, pushing cryptocurrency taxation implementation to 2027. According to Chosun Ilbo, the legislation narrowly avoided implementing a 22% levy on annual crypto gains exceeding 2.5 million won ($1,750) starting January 1.
STOs, which enable companies to issue digital tokens representing ownership in traditional assets like stocks and real estate, remain in regulatory limbo. Similarly, the implementation of corporate crypto accounts, designed to enhance transparency and reduce illicit activities, has stalled.
Market Impact
The martial law announcement’s market impact was immediate and severe. CNN reported that while the order was retracted within six hours, cryptocurrency markets experienced significant volatility. On Upbit, South Korea’s largest cryptocurrency exchange, Bitcoin prices experienced a sharp 33% decline to â‚©88,266,000 ($61,600) before recovering to â‚©127,000,000 ($88,600).
Financial regulators have temporarily abandoned their planned December rollout of guidelines for real-name accounts, prioritizing stability in traditional financial markets. An anonymous source cited in Chosun’s report stated: "The martial law crisis has taken all of the National Assembly’s attention… We should view this as an indefinite postponement. It will last at least until the impeachment situation is resolved."
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