South Korea Crypto Industry Urges Development Before Taxation

Democratic Party Meets With Five Major Exchanges

Decision on Delay to Be Reviewed, Conclusion Due Within One to Two Weeks

South Korea’s crypto industry has asked the Democratic Party to further delay taxation scheduled to take effect in January. The industry said the domestic market remains at an early stage of development and that systems for securing overseas trading data and building a tax framework are still inadequate. The party said it will review the request and decide within one to two weeks whether to grant another delay.

The Democratic Party’s policy committee and representatives of the country’s five major crypto exchanges held a meeting at the National Assembly on Oct. 30. Rep. Oh Gi-hyoung of the Democratic Party, the ruling party’s senior member on the National Assembly’s planning and finance committee, said after the meeting that the industry had requested a tax delay and participants discussed whether the rationale was persuasive. Any postponement would require the bill to be passed by the end of November, he added, and a decision must be made within one to two weeks after reviewing the broader social issues.

At the meeting, industry representatives emphasized that South Korea’s virtual asset market is centered on individual investors, while participation by corporations and foreigners remains restricted. They also argued that with derivatives trading limited unlike in the US, regulatory groundwork to foster the industry should come first.

The same argument for delaying taxation was raised at a forum hosted by Democratic Party lawmaker Min Byung-duk. Kang Sung-hoo, chairman of the Korea Digital Asset Business Association, said taxation should be postponed for two years because the US will not join the Crypto-Asset Reporting Framework, or CARF, until 2029. If taxation begins next year, authorities may not be able to properly identify income earned through overseas exchanges, potentially concentrating the tax burden on users of domestic platforms.

The People Power Party held its own forum on crypto taxation the same day, hosted by Rep. Yoon Sang-hyun. Lee Tae-ho, a visiting professor at Yonsei University’s Graduate School of International Studies, said the financial investment income tax was abolished after opposition from investors in their 40s and 50s, who mainly participate in the stock market, while the coin tax remained in place even though investors in their 20s and 30s account for 44% of crypto accounts.

Ha Ji-eun, Hankyung.com reporter hazzys@hankyung.com

Lee Esther, Hankyung.com reporter esther@hankyung.com