S.Korea's Cryptocurrency Tax Delays Open Opportunities For Threats: 2028 Target Date Eyed

In the world of cryptocurrency, delays in taxation have put the entire system at risk. Originally set for October 2021, the tax law passed during the Moon Jae-in administration was first postponed to January 2023, then again to January 2025 under Yoon Seok-yeol. Concerns over investor burden and market confusion were the reasons given each time.

If the ruling party postpones it again, the tax on cryptocurrency income will be delayed for over six years. Critics argue that public opinion heavily influences tax policy. The Financial Services Commission reported that by the end of last year, domestic cryptocurrency investors numbered 6.45 million. People in their 30s and 40s make up more than half of this group, holding significant sway over public opinion. This demographic’s influence is why politicians are paying close attention to cryptocurrency investors.

Dissatisfaction with cryptocurrency taxation has grown with recent drops in Bitcoin and other cryptocurrencies. An insider noted that the daily trading volume on domestic exchanges fell from 20 trillion won in March to 2 trillion won recently. Imposing the tax next year might drive away investors and further reduce trading.

Meanwhile, the financial investment income tax, scheduled for early next year, is under review. The government may abolish it, but former Democratic Party leader Lee Jae-myung suggested rethinking its timing. If cryptocurrency taxation proceeds while the financial investment tax is delayed, investors will feel relatively deprived.

Need for Cryptocurrency Regulation

Critics argue that full-scale taxation is tough due to insufficient systems and institutional preparation. A government official mentioned the need for secondary legislation to classify cryptocurrencies and detail business types for easy tax implementation. Yet, others counter this claim, pointing out that after two delays and three years of preparation, the excuse of “lack of preparation” is weak.

There are concerns that postponing the tax again, due to public opinion and market conditions, might lead to its eventual collapse. If postponed until January 2028, a general election in April that year could lead to another delay.

The principle of “where there is income, there is tax” is being undermined by repeated delays. Some argue that early next year, before the 2026 local elections, is the right time to implement the tax. The government will announce its tax law revision bill at the end of this month. Deputy Prime Minister Choi Sang-mok stated that they are reviewing the matter. The Democratic Party will clarify its stance after the government’s announcement.