South Korea Ruling Party Backs Delay, Eventual Repeal of Crypto Tax as Rules Remain Unclear

South Korea’s ruling People Power Party is moving to delay taxation of virtual assets, arguing that pressing ahead with the government’s plan would cause confusion because the relevant systems are still inadequate.

Jeong Jeom-sik, floor leader of the People Power Party, made the remarks on Sept. 21 at a National Assembly policy roundtable on improving the digital-asset taxation system. “The principle of taxing income where it arises is important,” Jeong said. “But we need to take another close look at whether the institutions and systems needed to tax digital assets fairly and accurately are fully in place.”

The meeting was held about three months before virtual-asset taxation is scheduled to take effect in January 2027. Attendees included Jeong; Lim I-ja, the People Power Party’s policy committee chair; and lawmakers Seo Il-jun and Song Eon-seok. Industry participants included Dunamu CEO Oh Kyung-seok, Bithumb CEO Lee Jae-won and Digital X CEO Oh Se-jin, along with other executives from major South Korean virtual-asset exchanges.

Jeong said concerns from the market remain unresolved. In transactions involving overseas exchanges or wallets, he said, it can be difficult to accurately verify acquisition costs and trading records. Standards also remain unclear for how to reflect gains and losses from new forms of transactions.

He added that many young people are participating in the digital-asset market at a time when jobs are scarce and wage income alone often is not enough to buy a home. If taxation is rushed without adequate preparation, he said, the resulting confusion and burden would ultimately fall on young investors. Jeong also said the fairness of the tax should be reviewed given that South Korea’s financial investment income tax has already been abolished.

Tax System Still Inadequate…Pressing Ahead Would Confuse Investors

Lim said at the meeting that if taxation is implemented before the system and infrastructure are fully ready, the confusion and burden will inevitably fall on investors and market participants. To levy a tax, she said, authorities must clearly define what is being taxed and taxpayers must be able to anticipate how much they owe. But virtual-asset taxation still lacks a sufficient framework to verify the basic data needed to calculate gains, including purchase prices, she said.

She also referred to ongoing legislative discussions on the Digital Asset Basic Act. Lim said the National Assembly is discussing enactment of the law and that work to define the legal nature of digital assets and build a basic institutional framework should proceed in tandem with the tax regime. In that sense, implementing virtual-asset taxation before the basic law is in place would be premature, she said.

Some party officials also questioned whether the tax would do much to boost revenue. Choi Soo-jin, the party’s senior floor spokesperson, told reporters after the meeting that implementing the tax under current conditions would create market confusion and ultimately shrink the market. Any gains in tax revenue are likely to be outweighed by weaker domestic trading and an outflow of investment funds overseas, she added.

Choi also said the Digital Asset Basic Act has yet to be enacted, meaning even key terminology has not been properly defined. The current tax framework has broader problems, she said.

Public Hearing to Be Held Soon…Party Says It Will Gather More Views

The People Power Party’s position is that virtual-asset taxation should ultimately be abolished. Choi said the party line is that taxing digital assets at this stage is too much to ask. The party plans to hold a public hearing soon and gather additional views on the tax, she said.

She added that, in principle, abolishing virtual-asset taxation is the right approach. If the tax is found to damp investment, the party plans to move toward repeal, she said.

The government, meanwhile, intends to proceed with virtual-asset taxation next year as scheduled. To prepare, the National Tax Service created a dedicated Digital Asset Division in July and plans to announce tax guidelines as early as October 2026.

Lee Hyoung-il, the nominee for deputy prime minister and finance minister, recently said in a written response submitted to the National Assembly that it would be desirable to begin taxation in 2027, in line with the basic tax principle that income should be taxed where it arises.