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Lawmakers in South Korea have agreed to delay the launch of its crypto tax until January 2027.
The decision, which signals a policy reversal from resisting delays, impacts taxes on cryptocurrency trading profits.
“We have decided to agree to a two-year moratorium on the implementation of cryptocurrency taxation proposed by the government and ruling party,” said Democratic Party floor leader Park Chan-dae.
While the government proposed a two-year postponement and the ruling People Power Party suggested a three-year delay, the Democratic Party had earlier opposed both, instead advocating for increased tax deductions as an alternative.
The Democratic Party’s initial proposal sought to raise the tax-deductible threshold for cryptocurrency profits to 50 million won ($35,630.68), significantly higher than the current threshold of 2.5 million won, in an attempt to address concerns while avoiding a delay in the law's implementation.
Nonetheless, Park revealed the party would still vote against the government’s inheritance and gift tax bills that “benefit the super wealthy.” The government’s inheritance tax reform would lower the top tax rate from 50% to 40% and increase deduction thresholds for children inheriting from parents.
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Last month, Democratic Party leader Rep. Lee Jae-myung backed the government’s decision to scrap a planned tax on financial investment income.
“I could not ignore the voices of 15 million financial stock investors who might be affected by structural vulnerability,” he said.
South Korea experienced a 67% surge in the country's daily crypto trading volume during the first half of 2024, reaching six trillion won, according to the Financial Services Commission.
Additionally, the number of domestic investors rose by 21%, totaling 7.78 million, with Bitcoin and Ethereum dominating holdings.
This robust growth underscores the importance of carefully calibrated regulations to support innovation while maintaining market stability.
In October, Finance Minister Choi Sang-mok announced plans that require companies handling international stablecoin and cryptocurrency transactions to pre-register with authorities and report monthly transaction data to the Bank of Korea.
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Choi said this data will be shared with South Korean tax, customs, financial, and international regulatory bodies to detect illegal activities like arbitrage and money laundering.
The Korea Customs Service estimates that nearly 88% of foreign exchange crimes, totaling around KRW 1.65 trillion ($1.2 billion) involve cryptocurrencies.
