South Korea Proposes Delaying Crypto Gains Taxation to 2028

• The South Korean government has proposed delaying the plan to start crypto gains taxation until 2028, making it the third postponement since January 2022. 

Due to a lack of clarity surrounding crypto gain taxation, there have been growing concerns among crypto investors in the country, which has even affected the prices of major cryptocurrencies.

The South Korean government has proposed delaying the plan to start crypto gains taxation until 2028, making it the third postponement since January 2022. 

The ruling People Power Party suggested holding on with the plans to kickstart the crypto tax because it could affect the crypto market and affect investors’ sentiment.

 In the bill submitted to the National Assembly by the party, they stated that most crypto investors would likely leave the market if the tax is imposed.

The South Korean government initially proposed a 20% taxation on crypto gains, and it was scheduled for January 1, 2022, but it was pushed forward twice to January 2025 due to high criticism from crypto investors.

Concerns Among Crypto Investors

Due to a lack of clarity surrounding crypto gain taxation, there have been growing concerns among crypto investors in the country, which has even affected the prices of major cryptocurrencies.

It was revealed that the daily trading volume on domestic exchange, which was around 20 trillion won in March, depreciated to the 2 trillion range, further strengthening the fact that should the crypto tax gain be implemented, it could even reduce the trading volume to a lower number. In a report by Hankyung, they revealed:

“If the cryptocurrency income tax is imposed early next year, most investors will leave, further reducing trading.”

The delay in the crypto tax is also being examined in the context of the overall taxes on financial investments in South Korea. The government had earlier said it would get rid of the tax on income from financial investments, but now it seems they are thinking about that again. 

With the crypto tax potentially being delayed while they are still deciding on the financial investment tax, there are worries that crypto investors might feel they are being treated unfairly compared to other investors.

Supporters of the delayed taxation emphasized that the system and regulatory framework for properly taxing crypto still need to be improved, noting that the secondary legislation still needs to classify crypto trading and clearly state the type of business it is within the industry. 

However, others believed the government had had enough years to plan properly, having had three years to prepare since the first delay. They said:

“We have already postponed implementation twice, and we had three years of preparation time, to claim ‘lack of preparation’ to postpone taxation again means that the government did not do what was necessary.”

The Ministry of Strategy and Finance has made it known that a decision is yet to be made regarding postponing cryptocurrency taxation. The ministry is expected to announce its position on the tax code by the end of this month.

With a general election scheduled for April 2028, there are worries that cryptocurrency taxation could face further delays if the political sentiment shifts again.