
South Korea considers cryptocurrency tax - fourstar
https://www.reuters.com/article/us-markets-bitcoin-southkorea/south-korea-to-hold-emergency-meeting-on-cryptocurrencies-measures-expected-friday-idUSKBN1E703O?il=0
======
rudiger
At its core, the current cryptocurrency craze is simply an unprecedented
wealth transfer to China from the rest of the world.

Until the end of 2013, Bitcoin was predominantly traded for US dollars.
However, after the crash of 2013, miners consolidated in China and Bitcoin
mostly traded for Chinese yuan[1]. At the start of 2017, regulators in China
cracked down on digital currency exchanges[2] and trading quickly moved to
Japanese yen and, more recently, South Korean won[3].

All of the early buyers are selling. This won't end well.

[1]: [http://www.businessinsider.com/bitcoin-trading-china-yuan-
re...](http://www.businessinsider.com/bitcoin-trading-china-yuan-
remnibi-2017-1)

[2]: [http://fortune.com/2017/01/05/bitcoin-plunge-china-
currency/](http://fortune.com/2017/01/05/bitcoin-plunge-china-currency/)

[3]: [https://www.bloomberg.com/graphics/2017-bitcoin-
volume/](https://www.bloomberg.com/graphics/2017-bitcoin-volume/)

~~~
scottnyc
I agree that this might be a wealth transfer to China. Bitcoin inherently does
not hold any value, it is a ledger. When someone buys bitcoin, someone else
sells it and takes the cash out of the system.

Right now, a lot of mining is still taking place in China since energy is
cheap. These miners sell their coins outside of China and bring cash back into
the mainland to pay for the energy and hardware used for mining. So in it's
most simplistic form, when you buy a bitcoin, you are adding to the earnings
of Chinese energy companies and hardware companies (and some naturally goes to
speculators and miner margins).

~~~
passwordreset
> Bitcoin inherently does not hold any value, it is a ledger.

I just want you to be aware that those 2 sentiments are directly
contradictory. A ledger has value -- an online, world-wide, decentralized,
distributed, peer-to-peer ledger moreso. Estimate the value of the ledger
(this is a significantly different endeavour than estimating market cap),
divide that value by the total number of BTC in circulation, and you have
estimated the value of a BTC.

~~~
root_axis
> _A ledger has value_

Why? Based on what? That's like saying "a state machine has value". That
_might_ be true in some contexts, but an arbitrary implementation of a concept
is not necessarily valuable. Certainly, the value prospect of the ledger has
no relationship to how many cryptotokens the ledger accounts to one's balance
(that is to say, buying up cryptotokens is purely speculative because _owning
more_ does not make the ledger _more useful_ )

~~~
AgentME
A ledger that me and another entity (such as a friend I owe money to or a
retailer I want to buy from) can both agree on to use to accomplish
transactions is pretty handy.

------
neuro_imager
This thread reminds me that even on HN most comments on the internet are from
people with very little understanding. I expected the "bubble", "tulip", "no
value" arguments to come from the chicken littles on Forbes.

If you think Bitcoin is overvalued, fine. Pour yourself a stiff drink and
accept some people might lose some money.

The sort of emotional hyperbole on here about "cryptocurrencies need to be
banned by the loving, paternal, incorruptible government to save the world
from ourselves" is not just getting old, its absurd.

Having a censorship-resistant, globally-accepted asset would grant an
unparalleled financial opportunity. Even if Bitcoin falls short in practice –
it’s closer to the mark than any non-crypto asset.

Being able to send money around the world with real-time market-based fees
that are often lower than many alternatives is useful. Having a place to park
value when banking is not available is also useful. The list goes on…

Do you trust the government and the financial institutions that much that
you're willing to hand them back the reigns of your financial future?

~~~
fatjokes
> The sort of emotional hyperbole on here about "cryptocurrencies need to be
> banned by the loving, paternal, incorruptible government to save the world
> from ourselves" is not just getting old, its absurd.

Why is it "getting old"? It's a fair concern that something so volatile should
be examined critically and relentlessly. People don't just "get a stiff drink
and accept they'll lose money" if it goes down---they jump out of windows.

I'm hesitant to jump in cryptocurrency discussions because 1) I know too
little about them, even at a technical level and 2) they're consistently
filled with "emotional hyperbole" (that we agree on) from both ends.

I think governments/regulators should have some say the same way you'd want
them to regulate any financial instrument and punish Ponzi schemers and pump-
and-dumpers.

I'd like to think about the motives of both sides from being so passionate.
For naysayers, I imagine it's a bit of sour grapes. For yaysayers, it's a bit
more obvious---once the hype dies, they'll stop making money.

~~~
neuro_imager
> It's a fair concern that something so volatile should be examined critically
> and relentlessly.

I agree - but backed with concerns based on legitimate understanding not
"price is going up quickly, must be a scam".

> I think governments/regulators should have some say the same way you'd want
> them to regulate any financial instrument and punish Ponzi schemers and
> pump-and-dumpers.

Because they did such a great job in 2008? When are they planning to punish
the architects of the financial crisis? Who's going after the banks when they
launder money for mexican cartels and ISIS? You really think these people are
trying to protect the public?

> I'd like to think about the motives of both sides from being so passionate.

I can't speak for anyone else but I come to these threads hoping to find
sensible insight and technical analysis not "THIS IS A BUBBLE! BAN IT!"

> For yaysayers, it's a bit more obvious---once the hype dies, they'll stop
> making money.

There may well be a huge correction but the overall market is anti-fragile and
here to stay.

An article that sums up my thoughts:
[https://www.callmegwei.com/2017/11/24/crypto-price-isnt-
an-e...](https://www.callmegwei.com/2017/11/24/crypto-price-isnt-an-end/)

~~~
fatjokes
> I agree - but backed with concerns based on legitimate understanding not
> "price is going up quickly, must be a scam".

Something that goes up and down so quickly and so frequently does warrant
concern. Nobody has that understanding at the moment and it needs
investigating.

> Because they did such a great job in 2008?

Maybe not the American government, but IIRC, Iceland is punishing the bankers
(jail!) and the Canadian government has been praised for having kept a steady
ship during the crisis through their economic policies. Governments can work.

~~~
colordrops
> Something that goes up and down so quickly and so frequently does warrant
> concern.

Why is "going up and down so quickly" inherently bad? There's no moral or
legal standard on volatility. It's just a metric, everyone is aware of it, and
everyone should act accordingly.

~~~
thkim
it is not about morality. volatility is bad for any currency. it's simple
truth.

~~~
colordrops
Despite mass perceptions and previous assertions long in the past by its
creator, bitcoin is not a currency, nor are most people attempting to use it
as one. Neither is it digital gold, or an asset management system, or any
other easy label. These terms were and are used as analogies to help people
grasp blockchain technology, but it is a new and altogether different beast
from previous monetary instruments, and not subject to the same constraints.

------
non_sequitur
Updated: South Korea Clarifies Position After Reports of Possible Ban on All
Crypto Transactions

"On Monday, Financial Services Commission (FSC) Chairman Choi Jong-ku
clarified to reporters at a luncheon meeting that “the FSC is mapping out
measures to restrict [cryptocurrency] transactions to some extent,” which he
did admit include “an all-out ban,” Yonhap reported. “The restriction is aimed
at minimizing side effects of bitcoin transactions and reducing speculative
investment,” the news outlet added. Choi was then quoted by Asia Economy:

We are discussing to what extent the government will regulate the trade,
including the prohibition of trade. The chairman noted that the Ministry of
Justice is currently reviewing measures to regulate cryptocurrencies.
News.Bitcoin.com reported last week on this ministry being put in charge of a
new Virtual Currency Task Force in order to “set up and implement the
regulatory measures through consultation between the related ministries.”

And also "It is expected that the government measures related to virtual
currency will not be a one-sided regulation that prohibits virtual currency
trading altogether, but a regulation that limits investment amount and
investment qualification."

[https://news.bitcoin.com/south-korea-reports-ban-all-
crypto-...](https://news.bitcoin.com/south-korea-reports-ban-all-crypto-
transactions/)

~~~
seibelj
Thank goodness it’s impossible to ban crypto! Everyone in SK withdraw from the
exchanges before they seize it!

~~~
lucozade
> Thank goodness it’s impossible to ban crypto!

No it's not. It may be hard to prevent all SK citizens from using
cryptocurrencies as SK is a reasonably open society, but it would be
straightforward to ban their use.

~~~
noarchy
A ban won't stop crypto any more than it stops illegal drugs, prostitution,
etc. That said, there would be an effect on the crypto markets if a handful of
major nations took action. So the question I have would be: will they aim for
the taxes (presumably allowing crypto trading), or for an outright ban?

~~~
kazagistar
Sure, but unlike drugs or prostitution, aggressive police action doesn't harm
any underprivileged classes, but rather a bunch of affluent tax evaders.

~~~
mtgx
Do you think most people owning cryptocurrencies are affluent tax evaders?

~~~
WJW
Yes? It's certainly not the people struggling to buy food if that's what you
are implying.

~~~
neuro_imager
Its ironic that the same people who keep saying cryptocurrency has no
underlying value, that its just a speculative bubble, are saying that profits
from its increase in price should be aggressively taxed.

~~~
s73ver_
I don't see why it's ironic. Whether something is useful or not, and whether
it's increases in value should be covered under financial taxes like any other
commodity are separate issues.

~~~
neuro_imager
Commodity: noun, plural commodities. 1.an article of trade or commerce,
especially a product as distinguished from a service. 2.something of use,
advantage, or value. 3.Stock Exchange. any unprocessed or partially processed
good, as grain, fruits, and vegetables, or precious metals. 4.Obsolete. a
quantity of goods.

So if you're saying its a commodity (and therefore should be taxed), it has
value (and has to be based on something).

But semantics aside, taxation is theft, even more so in this case - there's no
justifiable reason to hand over a portion of the gains to a government that
had no involvement in the creation of the source of revenue.

~~~
dang
> _taxation is theft_

Please keep generic ideological tangents off HN. They lead to angry-samey
discussion rather than thoughtful-curious. Fortunately that didn't happen in
this case, but then not all sparks lead to wildfires, even in a dry forest.

------
smaili
> Australia’s central bank governor Philip Lowe warned on Wednesday the
> fascination with the assets felt like a “speculative mania.”

Just curious, what is it about speculation that has govs so worried? It’s
quite clear at this point Bitcoin has grown far too large and most are now
speculating on its value as a store so what benefit is there to step in,
attempt to regulate it, and risk its undoing? To me, I’m reminded of Sean
Parker’s Social Network quote about putting ads on TheFacebook, _It’s like
you’re throwing the greatest party on campus and someone’s saying it’s gotta
be over at 11_

~~~
thkim
When a bubble bursts, it's not just about some people, but it brings down the
whole economy. I can't believe people have already forgotten what CDO has done
to this economy. Bitcoin & cryptos are financial weapons of mass destruction.
Any responsible government ought to outright ban them all already.

~~~
fragsworth
> Bitcoin & cryptos are financial weapons of mass destruction.

You need to explain this. Many of us just think it's a good replacement for
gold and other precious metals. Is gold a "financial weapon of mass
destruction"?

~~~
thkim
that's a valid question. three reasons why bitcoin & crypto is NOT like gold
and very dangerous. 1) limited supply: drives up price enormously. almost
endless. minimal supply, infinitely increasing demand. depending on how far
this will go it can potentially suck up all liquidity in the world. 2) no
authority, no price stabilization, meaning extreme volatility that adds fuel
to vol & price rise, 3) ease of access: anyone can buy with a dollar, also
fueling to vol & price rise.

how bitcoin will end looks very ugly to me in any case. either collapsing a
global economy or bringing an unprecedented global inflation

~~~
jstanley
> 1) limited supply [...] 2) no authority [...] 3) ease of access

But there must be something bad about it as well, right?

------
verroq
In addition to bitcoin’s swings of 20-30%, the premium with respect to USD
also swings 10-20% in local South Korean exchanges. I really wonder what is
going on in there sometimes. The premium is persistent and doesn’t seem to be
arbed out. Is getting money in and out of South Korea so difficult that a 20%
premium doesn’t yield an arbitrage opportunity?

~~~
worldburger
Precisely. Tight currency flight controls (see Korean Anti-money laundering
laws).

$50,000/year is the limit per capita for personal use.

BUT even then, you’d need a Korean bank account which is difficult for non-
resident foreigners to get.

~~~
charlesdm
Do the same limitation apply to legal entities? Why not just set up a company?

------
alecco
If you are sure Bitcoin is going to crash get a short position in futures and
become rich.

------
tzfld
When this bubble will going to break, that will be a huge setback. This is
definitely not a good thing for the future of cryptocurrencies.

------
tboyd47
Is it speculation or is it individuals trying to secure their wealth?

~~~
runeks
Or is it both?

------
KasianFranks
Korea: Crypto is changing the world before our eyes, it's a black and white
swan event combined. Better to adapt than stick your head in the sand.

~~~
eksemplar
Crypto is changing the world. I've made money off of bitcoin, but I've done so
responsibly, like I suspect must people on HN have, by only betting what I
could easily afford to lose.

By going mainstream that sort of reasonable/safe approach has ended, and
people are now happily risking their entire savings. This will certainly be
great for some people, but it also has the potential to be absolutely
devastating.

In America you may not care about that, but in my part of the world, this
means that we're sitting on a real risk of society having to clean up after a
bunch of people lose everything.

The old world financial system is regulated to prevent regular people from
losing everything on investments. I suspect that in time Crypto will be
regulated similarly.

This isn't very libertarian, I know, but I'm old enough to have seen a few
bubbles burst and the result isn't pretty.

~~~
kgwgk
Nothing of value is being created, at least not of the magnitude of the
apparent “value” of the bubble, so making money off bitcoin is by definition
getting money from someone else. Clearly it cannot work forever, and those who
are left holding the bag won’t be happy.

~~~
KasianFranks
You mean like stocks and all other derivatives and equities including the US
dollar and other currencies on Forex. Smart.

~~~
arcticfox
Except stocks represent ownership in real companies making real products. If
one person owns 100% of a company and there is zero trading, it's still an
extremely valuable property. If one person owns 100% of a crypto, it is
worthless.

~~~
nybble41
> Except stocks represent ownership in real companies making real products.

But what does that mean in practical terms? Sure, if the company gets bought
out you might get some cash, and some companies still pay dividends. Aside
from those cases, though, shareholders have no direct claim on the company's
assets, and only the largest shareholders have significant influence on the
company's board. Most profits made by shareholders come from selling their
shares to another investor, not from the company itself.

> If one person owns 100% of a company and there is zero trading, it's still
> an extremely valuable property.

Assuming the company is solvent... plenty are not, despite a positive stock
price. They are trading on the expectation of future improvement, not present
value.

> If one person owns 100% of a crypto, it is worthless.

Every cryptocurrency (every non-commodity _currency_ , for that matter) starts
out owned 100% by someone. That doesn't make them all worthless. Say I create
a new currency with one million units, wholly owned by myself. If I stop
there, no one else will value my currency. However, say I also arrange to sell
widgets (standard market value $100) in exchange for 100 units of my new
currency. Now my currency has value, and people who want widgets may well be
willing to trade other goods or services for it—perhaps not 1:1, due to the
lower marketability, but at some discounted ratio. This makes more goods
available; people who have no need of my widgets may still transact business
using my currency and accept it as payment. At this point I no longer possess
100% of my new currency and it has taken on a life (and market value) of its
own. Even if I stopped producing widgets the currency may well remain in
circulation as a marketable commodity.

------
azizsaya
Crack down in India as well.
[http://www.livemint.com/Money/ubKaynMm1JKkoJUa0voi3M/Income-...](http://www.livemint.com/Money/ubKaynMm1JKkoJUa0voi3M/Income-
tax-department-conducts-surveys-at-Bitcoin-exchanges.html)

~~~
naveen99
Thats not a crackdown, that's just tax collectors looking for easy money. They
have plenty to gain from cryptocurrencies. It's like government banning
cigarettes, not going to happen. They make too much money from it.

------
josephagoss
Edit: ok not 100% sure of the solution, but I think that there should be a way
for the government to stop people putting their life savings into Bitcoin.

~~~
__warlord__
This, in fact, goes against what Cryptocurrencies represent and what scares me
the most is that people, in this case governments, are trying to regulate the
new with the old. Remember, innovation always win.

~~~
charlesdm
None of the proposed laws are unreasonable though. Anyone who thinks no
regulation is coming to this space is delusional. Regulation is good. KYC and
AML policies are good. That means regulators are taking proactive steps to
keep these currencies in the system, rather than banning them.

~~~
whataretensors
Good regulations are good. Bad regulation is untested code, written to benefit
lobbyists. Like the accredited investor regulation which is essentially
codified class warfare.

------
jfig
i see this has positive, clarifies the playing field, sets resilience test

------
AElsinore77
Is Bitcoin “legit?” Does it have any purpose or value? I think it does, and
here are several lenses through which to see cryptocurrencies, that explain
why:

As an investment: The world is already comfortable with “hot potato”
investments that derive their value from the fact someone else will buy it
later (ie non-dividend, non-voting stock). As long as a critical mass of
investors continues to see it as legitimate, it will be.

As a way to avoid hyperinflation: Central banks can print money seemingly
arbitrarily, diluting buying power. Cryptocurrencies present an alternative,
where growth of money supply is constrained by known and predictable rules.
What is inflation in the US, really? Is the stock market going up because real
world wealth is increasing, or is it just printed money flooding into assets
classes instead of “basket of goods” used to measure inflation?

As an alternative currency not tied to any particular central bank: The value
of a currency is ultimately derived from the real-world value controlled by
the individuals who believe in and use that currency. Most currencies have
their basis in communities defined by countries and borders — with
cryptocurrency, you introduce a new community, where the value of it is
ultimately derived from the real-world value controlled by all the individuals
who are willing to conduct business in that cryptocurrency.

As a check against authority in future with no cash: In a cashless future,
there is great potential for abuse of power if all transactions must go
through a central authority: 100% visibility and power to interfere with all
private transactions of the population. Do you want to give someone power to
see every little transaction you make, with power to stop it if they don’t
like what you are doing? In this cashless future, trust-less peer to peer
digital currency is essential.

As a way to diversify away from assets based in your own country’s currency:
cryptocurrencies offer a relatively accessible and easy way to diversify away
from holding all your wealth in one currency. To hold a certain currency is to
bet in that country relative to world. For America, there’s a bet on how the
USD will track against other currencies in decades to come. Is china gonna
unpeg the yuan further and further and make a gun for the number 1 spot? Has
America invested in the infrastructure, education, large scale coordination,
and energy capabilities to stay on top not just in terms of dollars on paper,
but real world value that underlies real wealth? Crypto is just one way to
place a bet based on a thesis around this.

All this is based on the fundamental question: what is money? Money can
essentially be seen as a “share” of the entirety of the worlds resources.
These “shares” give you authority to allocate resources, such as food,
materials, and other people. We all need a base level of “shares” to allocate
the food and shelter we need to survive. Most big businesses use their
“shares” to pursue one thing: getting more “shares”. And, your “share’s”
constantly get diluted. No matter how many shares exist, in the end they only
act as a distribution mechanism for the actual resources that exist. In this
light, crypto is just as real as anything else; its just another made-up
concept we use to coordinate society, just like traditional money.

What worries me most about cryptocurrency right now, is the underlying
cryptography, and how long that will last. Will there be fork to new method in
time?

------
Kazamai
Ban ban ban

------
thkim
Bitcoin and cryptos ought to be banned for good. Cryptocurrencies are scam and
outright bubble that will bring down the world economy. There is no currency
without an authority to guarantee its value. Cryptos are pure bubble. If there
is any good in this thing, it's ease of transaction, which is a question of
underlying technology - it has nothing to do with lack of authority or
decentralized scheme that cryptocurrencies tout as so important (and fail to
deliver).

~~~
glorkk
> Bitcoin and cryptos ought to be banned for good.

Serious question: how would you go about “banning” cryotocurrencies? The most
you can do is close exchanges which would make crypto harder to acquire and
liquidate.

~~~
WJW
_If_ I wanted do this (and was a government): \- Prohibit trading of
cryptocurrencies, punishable by several years in prison if caught. Structure
it so that you can personally go to prison even if you did it as part of a
business. This should 'discourage' casual investors. \- Pass a law stating
banks can lose their banking license if they allow transactions from/to crypto
exchanges.

Basically, declare cryptocurrencies to be similar to hard drugs or something
and follow the same playbook. Obviously the real hardcore crypto lovers will
still keep using it, and it will also not deter criminals who were outside of
the 'regular' system anyway. But if you have a functioning law enforcement
system like most western countries, you could certainly keep cryptocurrencies
from playing any large role in your economy.

~~~
passwordreset
Would it not be the case that declaring "cryptocurrencies to be similar to
hard drugs or something and follow the same playbook" is a recipe for
disaster? None of the drugs laws have really worked out all that well, as
they've led to mass incarceration which has a high social cost.

Many people seem to want drugs. Banning them often increases the price, due to
the supply going down or being more costly to obtain versus a constant demand.
To follow the same playbook, there seems to be a non-zero chance that Bitcoin
would become rarer, and therefore more valuable, and therefore more attractive
than fiat, increasing demand even more. I think it's a crap-shoot what role
cryptocurrencies would play after a large-scale ban.

But, yeah, _if_ I wanted to do that, and I was a government, that would
probably be the way I'd do it.

