Opposition Courts 13 Million Investors: “Taxing Only Crypto Is Unfair”

Meeting with Heads of the Five Major Crypto Exchanges

“Abolish taxation on virtual assets like the financial investment income tax”

With capital gains taxation on individual investors’ virtual assets (cryptocurrencies) set to take effect next year, the People Power Party is moving to abolish the tax. Observers say the move is aimed at appealing to younger voters ahead of the June 3 local elections.

Song Eon-seok, floor leader of the People Power Party, visited Coinone, a cryptocurrency exchange, at the Parc1 building in Yeouido, Seoul, on the 25th and said, “With the financial investment income tax having been abolished, proceeding with capital gains taxation on virtual assets ahead of its scheduled implementation next year runs counter to fairness.”

The meeting was attended by Jeong Jeom-sik, chair of the party’s Policy Committee; Yoo Sang-beom, senior deputy floor leader for operations; Kim Eun-hye, senior deputy floor policy chief; and Rep. Park Soo-young, the opposition’s ranking member on the National Assembly’s Finance and Economy Planning Committee. From the industry, the heads of the five major crypto exchanges (Upbit, Bithumb, Coinone, Korbit and Gopax) were present.

Song said, “Given that (virtual-asset investors) exceed 13 million and trading is active especially among young people, how we roll out policy going forward is important,” adding, “In Korea, virtual assets are already treated as goods and subject to value-added tax, so (imposing income tax on top of that) raises a double-taxation issue.”

The U.S. Securities and Exchange Commission (SEC), in a draft interpretive guidance on federal securities law regarding certain crypto assets and crypto-asset transactions released on the 17th, issued an authoritative interpretation that classifies virtual assets such as Bitcoin and Ethereum as “digital commodities” and says they do not constitute securities.

Some have interpreted Song’s listening to the crypto industry’s views as an effort to court younger voters ahead of the local elections.

On the 19th, Song introduced a revision to the Income Tax Act that would abolish income tax on virtual assets, as with the financial investment income tax. Under current law, income earned from the transfer or lending of digital assets is subject to a 22% tax rate—20% other income tax plus 2% local income tax—on the portion exceeding a 2.5 million won deduction. The tax was originally slated to apply from 2022 but has been postponed three times and is now set to take effect on January 1 next year.

Reporter Lee Seul-gi surugi@hankyung.com