The People’s Power Party of South Korea, the country’s ruling party, has submitted a bill to postpone the taxation of cryptocurrency gains to 1st January 2028. This plan is an extension of the original plan that was to be set by 2025.
The proposal submitted to the National Assembly on July 12 argued that due to current negative sentiments toward crypto assets, taxation could drive investors away. According to the party, the risk of losing money in cryptocurrencies is much higher than in traditional stocks.
Legislative Background on Crypto Taxes
At first, a 20% tax on each cryptocurrency transaction profit was scheduled to come into force on January 1, 2022. However, this has been postponed twice due to the feedback received from investors as well as industry experts.
The People’s Power Party, which had previously committed during the last general election campaign to delay the crypto gains tax, is now fulfilling its pledge with this proposal. The party argues that establishing a comprehensive framework for crypto regulation should precede any tax implementation.
South Korea Market and Investor Concerns
According to data from the Financial Services Commission, approximately 6.5 million South Koreans, or 12.5% of the population, engaged in crypto transactions by the end of the previous year. The Korean won has also surpassed the U.S. dollar as the most frequently used fiat currency in crypto trades in the early part of 2024.
These dynamics underscore the role that crypto plays in the South Korean financial landscape. However, the proposal notes that the imposition of an income tax on such a volatile asset could potentially cause several investors to exit the market.
Ongoing Developments and Government Stance
The Ministry of Economy and Finance has not yet announced any further postponements for the crypto tax schedule. However, they are expected to announce possible changes to the tax code by the end of this month.
At the same time, the government remains committed to establishing a sound regulatory environment for cryptocurrencies. This is because there are no adequate measures in place unlike in other stock markets. The party noted the need to create a structure to facilitate the taxation of cryptocurrencies once the need arises.
