South Korea’s Finance Ministry, FSC Exchanged No Official Letters Since 2022 on Overseas Crypto Derivatives Tax Gap

As South Korea prepares to begin taxing virtual assets next year, profits from crypto futures and options traded on overseas exchanges remain outside the tax net. The Ministry of Economy and Finance and the Financial Services Commission have not exchanged any official documents on the issue since 2022, KBS reported.

Citing data the ministry provided to the office of Rep. Kim Sang-hoon of the ruling People Power Party, a member of the National Assembly’s Strategy and Finance Committee, KBS reported on October 12 that the ministry said it had "no record of exchanging official documents with the Financial Services Commission since 2022" regarding taxation of crypto derivatives traded on overseas exchanges.

Starting next year, income earned by South Korean residents from transferring or lending virtual assets will be taxed at 22%, including local income tax, after annual gains and losses are netted out and a 2.5 million won deduction is applied. The rule covers both domestic and overseas exchanges.

By contrast, gains from futures and options trading on overseas crypto exchanges are not included in rules governing income from virtual-asset transfers and lending or in existing derivatives tax provisions. They are therefore outside the current tax framework.

Use of overseas exchanges is also growing. Data Kim’s office received from the National Tax Service showed that, based on 2024 holdings, 2,320 individuals and corporations reported overseas crypto accounts last year, with declared balances totaling 11.0763 trillion won. Based on 2023 holdings, 1,043 filers reported balances of 10.4031 trillion won.

The crypto industry has raised concerns that the gap in tax burdens between spot trading and futures and options could undermine tax fairness and push investors toward higher-risk derivatives trading on overseas platforms.

"Domestic spot investors pay 22%, while overseas futures investors pay not a single won," Kim said. "This unfair structure must be corrected before the tax takes effect."