Chaos in Cryptocurrency: Where to Next... 2030s See It as an 'Investment Tool,' Government Calls It 'Blind Speculation'

Hong Nam-gi and Democratic Party: "Virtual Assets, Not Virtual Currency... Taxation Inevitable"
'Legal Status' and 'Governing Ministry' Still Far from Resolution
Experts: "Define Virtual Currency First"

On the morning of the 28th of last month, when Bitcoin, a representative cryptocurrency, started the market with a slight upward trend, the coin prices were displayed on the price board at Bithumb Gangnam Center in Gangnam-gu, Seoul.
[Photo by Yonhap News]

[Asia Economy Reporter Kim Choyoung] Conflicts are arising between the youth and the government over virtual currency. While the 2030 generation claims it is their only investment option, the government has criticized it by stating that it has no monetary value at all. In response, a critical post appeared on the Blue House's public petition board, accusing the older generation of real estate speculation. Experts suggest that the government's definition of virtual currency should come first.

Financial Services Commission Chairman Eun Sung-soo said on the 22nd, "Virtual currency is a currency without intrinsic value and cannot be recognized." He added, "I do not think it is the right path to recklessly jump into assets that fluctuate 20% daily. If people are on the wrong path, the elders should tell them it is wrong," and "The government cannot protect everyone who invested in virtual currency." This essentially means that virtual currency cannot be recognized as a financial product nor can losses be protected.

The 2030 generation was angered by Chairman Eun's remarks. On the 23rd, immediately after his statement, a petition titled "We urge Financial Services Commission Chairman Eun Sung-soo to voluntarily resign" was posted on the Blue House public petition board.

The petitioner criticized, "It makes no sense to say there is no basis to protect investors but still demand taxes because they made money," and "The 4050 generation easily increased their wealth by riding the wave of real estate price rises, and now they are flooding regulations to prevent the 2030 generation from even having a chance."

The petitioner condemned, "The 4050 generation easily increased their wealth by riding the wave of rising real estate prices, and now they are imposing regulations so that the 2030 generation cannot even seize opportunities." Photo by National Petition Board capture

As the petition gained over 110,000 supporters within three days, resonating among young people, the National Assembly showed signs of bipartisan efforts to discuss virtual currency measures.

On the 27th, Hong Ik-pyo, Policy Committee Chair of the Democratic Party of Korea, said at the party's floor strategy meeting, "As virtual assets are being used as a new investment tool, policy support for market participants is necessary," and "We will closely examine the market and find appropriate countermeasures."

The People Power Party also strongly criticized the government and ruling party, announcing the formation of a virtual currency task force within the party to discuss investor protection measures. On the 26th, Joo Ho-young, acting party leader and floor leader, emphasized at the emergency committee meeting, "The government and ruling party are floundering and unable to grasp the cryptocurrency issue," and "Instead of just threatening to shut down exchanges, we need to discuss whether to institutionalize them and how to protect investors."

Despite extreme price volatility, virtual currency is emerging as a new investment tool for the 2030 generation, fueled by expectations of quick fortunes.

According to data obtained by Assemblywoman Kwon Eun-hee of the People’s Party from the four major domestic virtual currency exchanges (Upbit, Bithumb, Coinone, Korbit), 2,335,977 people in their 20s and 30s (including duplicates) traded virtual currency at least once in the first quarter (January to March) of this year. Among them, 1,584,814 people in their 20s (816,039) and 30s (768,775) opened accounts and started investing in the first quarter.

Yun Ho-jung, the floor leader of the Democratic Party of Korea and chairman of the Emergency Response Committee, is speaking at the Emergency Response Committee meeting held at the National Assembly in Yeouido, Seoul, on the morning of the 28th of last month.
[Image source=Yonhap News]

Nearly four years have passed since the virtual currency frenzy of 2017, but clear measures surrounding virtual currency have yet to emerge. On the 28th, Chairman Hong stated, "People refer to it variously as virtual currency or cryptocurrency, but I clearly consider it a virtual asset, and Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki shares the same view," defining virtual currency as an 'asset' rather than 'currency,' yet its legal status remains unclear.

Some have argued that taxation should be deferred until the market is institutionalized, but Deputy Prime Minister Hong made it clear that "taxation cannot be avoided on assets and income generated from virtual asset transactions due to tax fairness," confirming that virtual currency is subject to taxation.

The Democratic Party stated regarding the tax deferral theory, "It is not at a stage where the party or government is officially discussing it," but added, "We will listen to various opinions," expressing a general stance.

Meanwhile, due to the unclear legal status of virtual currency, the process of selecting the competent ministry to regulate it is also facing difficulties. On the 27th, Deputy Prime Minister Hong said, "The Office for Government Policy Coordination is reviewing and monitoring related ministries and measures, and it would be good to clearly designate a competent ministry to oversee policies," indicating that this is under consideration.

He also expressed a personal opinion that "the Financial Services Commission should be the competent ministry," but the FSC has not issued an official position.

Experts emphasize that the legal status of virtual currency must be established first. Kim Ki-heung, emeritus professor of economics at Kyonggi University, explained, "The competent ministry will differ depending on how virtual currency is defined," and "The legal status of virtual currency is still unclear."

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