South Korea’s Crypto Sector Hit Hard by Martial Law

South Korea’s cryptocurrency industry is facing an unexpected roadblock, as martial law declared in early December has led to a major pause in crypto legislation. The National Assembly has put a hold on all crypto-related legislative work, leaving many crucial decisions on hold until at least mid-2025.

With delayed tax laws and important regulatory issues now in limbo, the country’s crypto future looks more uncertain than ever. Here’s what you should know.

Crypto Tax Delay: Almost 2 Years

One of the most significant outcomes of this delay is the pushback of South Korea’s new crypto tax. Initially set to begin in January 2025, this tax would have imposed a 22% levy on crypto profits exceeding $1,750. However, the National Assembly voted to delay its introduction until 2027, meaning investors are spared from this tax for now.

The news of martial law led to a sharp drop in Bitcoin prices on Upbit, South Korea’s largest exchange. In just 30 minutes, Bitcoin’s value fell by 30%, dropping from ₩88,266,000 ($61,600) to ₩127,000,000 ($88,600), causing widespread concern in the market.

Crypto Legislation Paused Until 2025

With martial law now in effect, the National Assembly has paused all work on important crypto-related issues. This includes the review of South Korea’s ICO ban, the potential for companies to purchase crypto for their balance sheets, and the consideration of crypto-based securities. These issues will now be addressed no earlier than mid-2025.

As uncertainty grows, many blockchain and crypto companies are considering relocating to countries with clearer regulations. Industry leaders are urging the government to establish more definitive rules to prevent investment from fleeing to more crypto-friendly nations.

Is South Korea Missing An Opportunity?

While the government has halted work on major crypto laws, the Financial Services Commission (FSC) has introduced some basic rules for corporate crypto accounts. These guidelines offer some relief, but the more complex issues—like those surrounding STOs and ICOs—are unlikely to be resolved before 2025.

Experts like Kim Gap-rae from the Capital Market Research Institute warn that South Korea could miss out on key opportunities in the global crypto space. As countries like the U.S. continue to make progress with crypto regulation, South Korea’s lack of movement could put it at a disadvantage.

South Korea’s regulatory uncertainty leaves its future in the hands of time—waiting to see whether it will rise to the challenge or fall behind global competitors.