[Bitcoin Now] Biden Pushes 'Wealth Tax'... 60 Million Won Also Collapsed

President Biden Pushes Nearly Double Capital Gains Tax Increase in US... Some States' Rates Exceed 50%
Kimchi Premium Falls to Single Digits Following Comments by Eun Sung-soo, Financial Services Commission Chairman

On the 23rd, when the domestic trading price of Bitcoin briefly dropped to the 50 million won range in the morning, a customer visiting Bithumb in Gangnam-gu, Seoul, is entering the exchange to receive consultation. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Gong Byung-sun] Bitcoin, the leading cryptocurrency, was significantly shaken after U.S. President Joe Biden proposed a wealth tax increase. When Eun Sung-soo, Chairman of the Financial Services Commission, also expressed a negative stance on cryptocurrencies, the "Kimchi Premium" disappeared, causing Bitcoin to plummet to the 58 million KRW range.

According to the domestic cryptocurrency exchange Upbit on the 23rd, as of 2:07 PM, Bitcoin recorded 56.98 million KRW, down 5.09% compared to the previous day. Bitcoin, which had been gradually declining from just below 70 million KRW the day before, began to plunge around 6 AM that day. This is the first time Bitcoin has recorded a price in the 50 million KRW range since the 9th of last month.

It is analyzed that President Biden's proposal for a wealth tax increase acted as a negative factor. On the 22nd (local time), U.S. economic media Bloomberg pointed out that Biden's plan to raise the capital gains tax rate for the wealthy led to a downturn in the cryptocurrency market. Matt Maley, Chief Market Strategist at U.S. asset management firm Miller Tabak, explained, "The tax increase could lead to market exits by those who have made large profits."

According to Bloomberg, the Biden administration plans to raise the capital gains tax rate for income earners over $1 million (approximately 1.1187 billion KRW) from the current 20% to 39.6%. When combined with additional taxes, the federal tax rate could increase up to 43.4%. With separate state taxes, the rate can exceed 50%. Bloomberg explained that the highest tax rate in New York State is 52.2%, and in California, it reaches 56.7%. In the U.S., capital gains on cryptocurrencies are already subject to income tax ranging from 10% to 37%. Additionally, if held for more than one year before selling, a capital gains tax of up to 20% is added. Wealthy cryptocurrency holders are thus more likely to liquidate due to the increased tax burden.

The Kimchi Premium, which refers to the price difference between domestic and overseas Bitcoin prices, also fell to single digits. As of 11:06 AM that day, the Kimchi Premium was 2.68%. After the U.S. cryptocurrency exchange Coinbase was listed on the Nasdaq market on the 14th, the Kimchi Premium rose to as high as 25.31%. This meant a price difference of over 15 million KRW compared to overseas Bitcoin prices. In the cryptocurrency industry, the Kimchi Premium is considered a sign of a price crash, as the presence of a bubble increases risk.

It is interpreted that Chairman Eun Sung-soo's remarks contributed to the disappearance of the Kimchi Premium. At a full meeting of the National Assembly's Political Affairs Committee the day before, Chairman Eun said, "Cryptocurrencies are highly speculative and have no intrinsic value," adding, "Market participants in cryptocurrencies cannot be regarded as investors." This is interpreted as meaning that cryptocurrencies are not viewed as financial products and will not be included within the regulatory framework. Furthermore, when asked about the fact that people in their 20s and 30s are major investors, he responded, "If they are going down the wrong path, it is necessary to tell them so," and "Adults need to talk to them."

This content was produced with the assistance of AI translation services.