South Korea’s Crypto Law Tax Pushback: No Taxes Until 2028?

South Korean crypto taxes have been delayed until 2021, and they may continue. Crypto taxes may be delayed until January 2028 by the ruling party. The impracticality of the current tax policy due to system and institutional failure influences this decision.

What’s Behind the Tax Delay?

A local news publication recently reported that the government is expecting an additional three-year delay, moving the effective date from January 2025 to January 2028. This move could provide significant tax relief to South Korean crypto investors, who have been vocal about their dissatisfaction with the proposed taxes, especially given the current downturn in the crypto market.

How Has Public Opinion Influenced Crypto Tax Policy?

Crypto taxation discussions in South Korea began in 2021 and have seen several postponements due to political and public pressures. Since then, public sentiment has played a key role in the ongoing delays. The current administration, under President Yoon Seok-yeol, seems responsive to the growing dissatisfaction among investors. Plus, delays in implementing financial investment income tax add to the situation’s complexity.

The Financial Services Commission (FSC) noted a surge in crypto investors, with the total number reaching 6.45 million in May 2024. However, with the recent decline in Bitcoin prices and overall market correction, many oppose the imminent tax, fearing it would drive investors away.

What Does This Mean for Investors?

The nation has a major cryptocurrency market. As of last year, 6.5 million people (12.5% of the population) used crypto, according to the Financial Services Commission. According to Kaiko statistics, the Korean won outperformed the U.S. dollar in crypto trading in the first quarter of 2024.

Hence, if the proposed delay is approved, South Korean crypto investors could enjoy three more years of tax-free gains and if rejected this will impact the Korean economy as investors threaten to leave the market. This period might give the government the necessary time to develop a more practical and investor-friendly tax system, potentially stabilizing the market and encouraging continued investment.

And It May Go On…

On the other hand, some opposition leaders blame the government for inadequate preparation and relying on public opinion in shaping tax policies. Despite these criticisms, the current administration’s decision to delay it to 2028 means that they want the crypto tax to address market concerns and provide a more stable environment for crypto investors in the country.

Also Read: Crypto Regulations in South Korea 2024