Ruling Party Lawmaker Urges South Korea to Scrap Crypto Tax Over Loss Rules

People Power Party lawmaker Park Soo-young called for South Korea to scrap its planned tax on virtual assets, arguing the measure is unfair because investors would not be allowed to carry forward losses.

In a video posted on his YouTube channel, "Park Soo-young's Economy TV," on Aug. 13, Park called for the government to "immediately withdraw the punitive tax plan that holds 13 million digital-asset users hostage."

Park contrasted the crypto tax with the repeal of the financial investment income tax and argued the two regimes were not being treated equally. "They abruptly scrapped the financial investment income tax in the name of reviving the domestic stock market, while slapping a punitive tax only on digital assets," he said. "That is little different from threatening people with a tax bomb if they do not invest in local stocks."

He also argued the tax would do little to steer money into South Korea's stock market and could instead accelerate outflows to overseas crypto markets. Rather than prompting investment in domestic equities, the policy would only speed the drain of national wealth overseas, he said. Park added that about 124 trillion won, or $89.9 billion, flowed to overseas crypto exchanges from January through September last year.

Park also pointed to the lack of a loss carryforward, which would allow investment losses to be deducted in a later tax period. "When coin prices collapse, investors cannot even carry those losses forward for deductions, yet the government is first in line to take a cut when there are gains," he said.

Under current law, taxation of income from virtual-asset investments is scheduled to begin on Jan. 1, 2027. The income will be taxed separately as other income, with an annual basic deduction of 2.5 million won, or about $1,810. Amounts above that threshold will be taxed at 20%, or 22% including local income tax.

The government has said it will proceed with crypto taxation as planned next year. Within the ruling People Power Party, calls have emerged to abolish the tax or delay it again.