Representative Lee Kwang-jae – a member of the ruling Democratic Party in South Korea – reportedly intends to receive campaign donations of digital assets. It also intends to issue non-fungible tokens (NFTs) as received for these contributions from mid-January next year.
Crypto to fuel political campaigns
According to a December 30 report from The Korea Held, the cryptocurrencies included in the initiative will be the two largest in terms of market capitalization – Bitcoin (BTC) and Ether (ETH), as well as a few local tokens. If realized, Representative Lee Kwang-jae will become the first lawmaker in the Asian country to accept digital assets for campaign finance.
“We are currently reviewing the selection of local wallet providers (virtual assets). We will be reviewing our portfolio address on our blog, Facebook page and YouTube channel in early January, ”said an administration official from Lee.
Bearing in mind that this is an experimental project, the lawmaker’s office said it initially intended to receive 10 million won (approximately $ 8,400) in cryptocurrency, with a limit of 1 million won ($ 840) set for each contributor.
The donated assets will then be converted to cash on a local digital asset trading platform. Subsequently, they will be employed in accordance with the regulations on political financing.
Lee’s office warned that due to increased volatility in the cryptocurrency industry, the actual value of the donation may be different when converted into fiat currency. This could result in tax deduction amounts that differ from people’s initial expectations during year-end tax settlements.
Controversial tax policy
Since the start of 2021, the government of the East Asian country has sought to impose strict rules on the local ecosystem of digital assets. One of them involved slamming those who generate profits over $ 42,000 from cryptocurrency trading with a 20% tax. The legislation was due to come into force in early 2022.
However, a few months later, the ruling party – the Democratic Party – proposed a postponement of tax policy. According to lawmakers, the nation does not have a well-designed plan for implementing the taxation process.
Soon after, the opposition party – The People Power Party – also argued that a delay in the legislation was needed. Representative Cho Myoung-hee – a member of the opposition – said that “it is not fair to impose taxes first at a time when the legal definition of virtual currency is ambiguous”.
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