South Korea’s political landscape is heating up over cryptocurrency taxation, as the country’s main opposition party moves to eliminate a planned levy on digital asset gains before it takes effect in 2027. The proposal adds a fresh twist to a policy that has already been delayed and faced strong resistance from both industry players and retail investors.
Opposition challenges fairness of crypto-only taxation
The conservative People Power Party has introduced a bill seeking to amend the Income Tax Act and abolish the proposed crypto tax entirely. The bill, sponsored by floor leader Song Eon-seok, argues that taxing cryptocurrency profits while exempting other financial assets creates an uneven playing field.
Under the current framework, South Korea plans to impose a 22% tax on crypto gains exceeding 2.5 million won (about $1,665), combining national and local taxes. However, critics point out that similar taxes on traditional investments, such as stocks, were scrapped in late 2024, raising concerns about selective taxation.
Supporters of the bill say this inconsistency undermines investor confidence and could push capital away from the local market. The proposal also references recent guidance from the U.S. Securities and Exchange Commission, which leans toward classifying many cryptocurrencies as commodities rather than securities, further fueling arguments against treating crypto under stricter tax rules.
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Delays, AI tracking plans, and political uncertainty
The crypto tax has already been postponed three times, with its original 2022 implementation date pushed to January 1, 2027, following sustained backlash. Despite the delays, the National Tax Service has been preparing for enforcement by developing an AI-powered system to monitor and analyze digital asset transactions.
Meanwhile, the ruling Democratic Party of Korea has taken a cautious stance. Senior policymaker Kim Han-gyu acknowledged the proposal but noted that the idea of fully abolishing the tax has not yet gained serious traction within the party.
With nearly 20% of South Korea’s population engaged in crypto trading and a market valued at over 95 trillion won ($63 billion), according to data from the Financial Services Commission, the outcome of this debate could significantly shape the country’s future with digital assets.
South Korea is preparing to enforce the tax
The National Tax Service has been preparing systems to track digital-asset transactions and calculate taxable gains. Authorities are also working on ways to identify crypto activity involving private wallets, although officials have acknowledged that tracking every self-custodied transaction is difficult.
South Korea is also building the infrastructure needed to collect the tax at almost the same time that opposition lawmakers are trying to remove the legal basis for collecting it.
If the abolition bill succeeds, some of that preparation could become unnecessary. If it fails, investors will face a system that authorities have spent years preparing to enforce.
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