- Bithumb Korea secured a major legal win after a court successfully overturned a previous ruling that imposed corporate tax.
- The court determined that Bithumb’s virtual assets were not considered inventory assets, eliminating the need to report a change in valuation method.
- The ruling provides legal clarity on the tax treatment of virtual assets in South Korea, benefiting businesses operating in the industry.
South Korean crypto exchange Bithumb Korea has secured a key legal victory against the country’s tax authorities. A high court ruled that Bithumb’s virtual assets are not to be classified as inventory, offering much-needed clarity to the digital asset industry.
The dispute stemmed from Bithumb’s change in its virtual asset valuation method between 2014 and 2017. Tax authorities claimed this led to underreported profits. However, the Seoul High Court sided with Bithumb, emphasizing the lack of regulations at the time. This ruling comes amidst South Korea’s increasing crypto scrutiny, with potential delistings for non-compliant assets looming.
Crucially, the court also determined that Bithumb’s virtual assets could not be considered inventory assets. The court’s reasoning was based on the nature of the company’s operations, which are primarily engaged in a brokerage business rather than holding assets as inventory. This also relieved the trading platform of the obligation to report changes in its valuation method, further weakening the tax authorities’ claim.
The ruling comes at a time of South Korea’s increasing regulatory crackdown on cryptocurrency. The nation is currently scrutinizing approximately 600 virtual assets against newly established standards, with those failing to comply facing potential delisting. Crypto exchanges like Upbit, Bithumb, Coinone, Korbit, and Gopax have been tasked with conducting rigorous reviews to determine which digital assets should remain listed under the new regulatory framework.
With Bithumb’s latest victory offering some clarification on the tax treatment of virtual assets, the broader regulatory environment continues to tighten. The crackdown on non-compliant assets and the legal battle faced by Bithumb Korea are both indicative of the growing regulatory oversight in the country.
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