South Korea’s implementation of martial law has impeded the implementation of critical crypto reforms

The measures implemented by South Korea, which were considered essential for the modernization of the country’s crypto sector, are currently in a state of uncertainty.

The announcement of martial law by South Korea earlier this month has resulted in a delay in the regulation and reform of its crypto sector until the following year.

The industry has been deprived of critical reforms, including the legalization of securities token offerings (STOs) and the introduction of real-name corporate crypto accounts.

People saw those steps as important for bringing South Korea’s crypto sector up to date, but they are now stuck, leaving the business with a long period of doubt.

STOs, or securities token offerings, are a method by which companies can raise capital by issuing digital tokens that represent ownership in real-world assets, such as equities, real estate, or bonds.

In the interim, the implementation of real-name corporate crypto accounts would enable organizations to trade digital assets under transparent, verified identities, thereby mitigating the risks of money laundering, fraud, and other illicit activities.

President Yoon Suk Yeol’s decision on December 3 brought the nation into a severe political and economic crisis, marking the first martial law announcement since 1980.

Impeachment proceedings and the upcoming year’s budget have become the primary focus of the National Assembly, resulting in the indefinite suspension of all legislative initiatives dealing with cryptocurrency.

On December 10, the National Assembly of South Korea narrowly approved a tax reform measure, which will delay the implementation of crypto taxation until 2027.

According to a report in Chosun Ilbo, the tax was nearly implemented on January 1, despite being originally scheduled for a December 4 vote. This tax would have imposed a 22% levy on annual crypto gains surpassing 2.5 million won ($1,750).

Despite the fact that there is bipartisan support for the legalization of STOs and corporate crypto accounts, progress has been stagnant.

Financial regulators, who were scheduled to implement phased guidelines for real-name accounts this month, have shifted their attention to the stabilization of traditional markets, including equities, bonds, and foreign currency.

Also Read: Markus Maier on how Nudge reallocation incentives are changing DeFi