A recent proposal by South Korean lawmakers suggests delaying the implementation of crypto gain tax until 2028. The ruling political party put forward this bill on July 12, pointing to the prevailing negative sentiments surrounding the crypto industry as the primary rationale behind the extension. The lawmakers emphasized that the current investment sentiment towards virtual assets is deteriorating, leading some to argue against hastily taxing virtual assets. They highlighted the high-risk nature of virtual assets, stating that they pose a greater risk of loss than stocks. Furthermore, they warned that the imposition of income tax could potentially drive most investors out of the market.
Initially, South Korea had planned to enforce its crypto gain tax on January 1, 2025. However, if the proposed bill receives approval, the new implementation date will be pushed back to January 1, 2028. A sub-committee convened on July 15 to further deliberate on the matter. This move aligns with President Yoon Suk-yeol’s electoral promises, as he vowed to extend the crypto gains tax during the last general election if chosen. His administration aims to establish a comprehensive regulatory framework before imposing the tax. Despite this progression, the Ministry of Economy and Finance has yet to finalize its stance on the delay. The ministry intends to unveil new tax policy amendments by the end of the month. A ministry spokesperson stated that no decision has been made regarding whether to further postpone the implementation of virtual asset income taxation.
South Korea has witnessed one of the fastest-growing adoptions of the emerging crypto industry on a global scale. According to reports from blockchain platform Kaiko, during the first quarter of this year, the national currency, Won, emerged as the leading currency for global crypto trades, boasting a cumulative trade volume of $456 billion on centralized exchanges. Additionally, the country has gained recognition for its proactive approach to crypto regulation. South Korea has implemented various rules aimed at enhancing consumer protection standards for crypto users operating within its jurisdiction.
By considering the proposed bill to delay the implementation of crypto gain tax, South Korea showcases its dedication to nurturing a sustainable and secure crypto ecosystem while also acknowledging the evolving landscape of virtual assets. This decision reflects the government’s commitment to striking a balance between fostering innovation and safeguarding investors in the crypto space.