Rep. Lee Kwang-jae – a member of the ruling Democratic Party in South Korea – is reportedly planning to receive campaign donations in digital assets. He also intends to issue non-fungible tokens (NFTs) as a receipt for such contributions starting from mid-January next year.
Crypto to Fuel Political Campaigns
According to a December 30 report by The Korea Held, the cryptocurrencies included in the initiative will be the two biggest by market capitalization – Bitcoin (BTC) and Ether (ETH), as well as a few local tokens. If realized, Rep. Lee Kwang-jae will become the first lawmaker in the Asian country to accept digital assets for campaign finance.
“We are currently reviewing selection of local (virtual asset) wallet providers. We will review our wallet address on our blog, Facebook page, and YouTube channel in early January,” an official from Lee’s administration stated.
Keeping in mind it is an experimental project, the lawmaker’s office said it first intends to receive 10 million won (around $8,400) worth of cryptocurrencies, with a 1 million won ($840) limit set for each contributor.
The donated assets will later be converted into cash at a local digital asset trading venue. Subsequently, they will be employed in accordance with political finance regulations.
Lee’s office warned that due to the enhanced volatility of the cryptocurrency industry, the actual value of the donation could be different when it is converted into fiat currencies. This could result in tax deduction amounts that differ from people’s initial expectations when conducting year-end tax settlements.
The Controversial Taxation Policy
Ever since the start of 2021, the government of the East Asian country has been seeking to impose strict rules on the local digital asset ecosystem. One of them included slamming those who generate profits of more than $42,000 from cryptocurrency trading with a 20% tax. The legislation was supposed to go into effect from the start of 2022.
However, a few months later, the ruling party – The Democratic Party – proposed a delay of the taxation policy. According to the lawmakers, the nation does not have a well-designed plan to implement the taxing procedure.
Shortly after, the opposition party – The People Power Party – also argued that postponing the legislation was necessary. Rep. Cho Myoung-hee – a member of the opposition – opined that “it is not right to impose taxes first at a time when the legal definition of virtual currency is ambiguous.”