Opposition to South Korea’s crypto tax grows
The dispute over cryptocurrency taxation in South Korea is intensifying again, slightly more than three months before the legislation is scheduled to take effect.
A petition calling for a further two-year delay has passed the threshold of 50,000 signatures on the National Assembly’s electronic petition system, making it eligible for review by the relevant committee. As of the morning of September 14, more than 50,800 people had signed it.
Under the current plan, from January 1, 2027, South Korea will impose a 20% tax on profits from the sale, transfer or lending of crypto assets. An additional local income tax raises the effective rate to 22%.
Investors will receive an annual exemption on the first 2.5 million won of profits. Income above this threshold will be classified as other income, with the first declarations expected in May 2028.
If approved, this would be the fourth postponement of the policy. The cryptocurrency tax was originally due to take effect in 2022, before being delayed to 2023, then 2025 and finally 2027.
Opponents argue that the regulatory framework and tax collection system remain incomplete, while the domestic crypto market is weakening. They warn that introducing the tax now could push investors towards overseas exchanges and place additional pressure on South Korea’s crypto industry.
Supporters of a delay also point to the recent performance of the country’s major exchanges. In the first half of 2026, revenue at Dunamu, the operator of Upbit, reportedly declined by 49.1%, while operating profit fell by 79.7%. Bithumb’s revenue dropped by 48.7%, its operating profit decreased by 83.4%, and the company moved from a profit to a net loss of 108.7 billion won.
A more sweeping petition submitted in May called for the cryptocurrency tax to be abolished entirely. It reached 50,000 signatures in only eight days and was referred to the National Assembly, but made no substantial further progress.
On August 10, a group of 11 lawmakers led by Jung Sung-kook introduced an amendment to the Income Tax Act that would move the start of crypto taxation to January 1, 2030, extending the delay by another three years. The bill was referred to the National Assembly’s Strategy and Finance Committee for consideration.
The lawmakers cited concerns similar to those raised by investors. South Korea has completed only the first stage of its digital-asset regulatory framework through the Virtual Asset User Protection Act, while broader rules covering the market, investor protection and tax collection are still being developed.
The controversy has also intensified because cryptocurrencies and securities are increasingly treated differently. South Korea abandoned its planned financial investment income tax on shares but is still preparing a separate tax on crypto assets. Investors would also be unable to carry cryptocurrency losses forward to offset profits in future years, despite the market’s high volatility.
South Korea has approximately 13 million crypto investors, meaning that any change to the tax regime would affect a significant share of the country’s retail investment community. The debate reflects a broader global struggle over crypto regulation, including how quickly new rules should be introduced without driving activity outside regulated domestic markets.
Government maintains the 2027 deadline
Despite pressure from investors and lawmakers, South Korea’s government has shown no intention of moving away from the 2027 deadline, which it reaffirmed at the end of July.
On September 13, Lee Hyoung-il, the nominee for deputy prime minister and minister of economy and finance, said cryptocurrency taxation would proceed as planned. South Korea’s National Tax Service is expected to publish detailed guidance before the end of 2026.
Lee rejected the argument that moving assets to overseas exchanges or personal wallets would necessarily prevent tax authorities from tracing transactions. Information about users of foreign exchanges could be obtained through overseas financial-account reporting and the OECD’s Crypto-Asset Reporting Framework (CARF), which enables participating jurisdictions to exchange tax information related to crypto assets.
Transactions that are not automatically recorded by reporting systems could still be detected through investigations into the source of funds and suspected tax evasion. The government says it will expand its infrastructure for identifying profits concealed through overseas or peer-to-peer transactions.
Lee also defended the classification of cryptocurrency profits as other income, arguing that this approach makes it possible to apply a basic exemption and a uniform tax rate while reducing filing costs.
