South Korea Considers Delaying Cryptocurrency Gains Taxation to 2028

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Right-wing party proposes three-year postponement of crypto tax implementation, citing negative investor sentiment and market risks. The move could push back taxation from 2025 to 2028, potentially impacting millions of Korean crypto users.

South Korea’s right-wing political party has proposed a significant delay in the taxation of cryptocurrency gains, potentially pushing the implementation date back to 2028. This move, if approved, would mark the third postponement of the controversial tax policy.

The proposal, submitted last Friday, argues that the current negative sentiment in the crypto market could lead to a mass exodus of investors if the government imposes income tax on an asset class considered riskier than stocks. The bill’s description on the South Korean National Assembly’s website emphasizes the need to protect investor interests and maintain market stability.

Initially scheduled to take effect on January 1, 2022, the 20% tax on crypto gains has already been delayed twice due to strong opposition from investors and industry experts. The current implementation date is set for January 1, 2025.

The People Power Party, which includes current President Yoon Suk-yeol, had pledged during the last general election to delay the crypto gains tax. This proposal aligns with their campaign promises and reflects ongoing concerns about the impact of taxation on the crypto market.

However, the Ministry of Economy and Finance has not yet confirmed any decision on additional delays. The ministry is expected to announce new amendments to the tax code at the end of this month, which may provide clarity on the government’s stance.

South Korea boasts one of the world’s largest and most active cryptocurrency markets. According to the Financial Services Commission, approximately 6.5 million citizens, representing 12.5% of the country’s population, used crypto as of the end of last year. Recent data from Kaiko also revealed that the Korean won surpassed the U.S. dollar as the most-used fiat currency for crypto trading in the first quarter of 2024.

As the debate continues, the crypto community in South Korea and global observers await the government’s final decision on this crucial tax policy.