"Cryptocurrency Taxation Postponed for the 4th Time? Abolition Would Be Better"

"Cryptocurrency taxation needs to be reorganized by July"

"Abolition is the right step rather than a 4th postponement"

Rep. Min Byung-duk: "Must expedite 2nd and 3rd phase legislation for virtual assets"

"Domestic policy authorities are moving too slowly on legislation"

"The current cryptocurrency taxation system included in the Income Tax Act has implementation issues. Rather than postponing it for a fourth time without fixing these issues, it would be better to abolish it like the Financial Investment Income Tax and establish a proper taxation system."

Kim Gab-rae, Director of the Capital Market Research Institute, made these remarks at the seminar 'Who are Korea's Digital Asset Investors?' held at the National Assembly Members' Office Building in Yeouido, Seoul on the 6th. The seminar was hosted by Democratic Party Rep. Min Byung-duk, a member of the National Assembly's Political Affairs Committee.

Director Kim said, "Cryptocurrency taxation has been postponed three times already - in 2022, 2023, and 2025 - and is now scheduled to be implemented on January 1, 2027," adding, "To prevent a fourth postponement, a taxation system that can resolve these issues needs to be included in the tax law amendment in July this year."

However, Director Kim pointed out that there is a severe lack of interest in reorganizing this taxation system. He criticized, "To prepare such a system by July this year, a task force or research service should have already been established, but no measures have been taken yet." He added, "In that case, it would be better to abolish the cryptocurrency taxation plan and start from scratch."

Problems with the current cryptocurrency taxation system include ▲unclear definition of cryptocurrency income, ▲lack of taxation standards for profits generated from airdrops and hard forks, and ▲concerns about health insurance premium impositions. Director Kim explained, "When countries like the US and UK have already recognized Bitcoin as an investment asset, I question whether it's appropriate to classify cryptocurrency investment income as 'other income'," adding, "The current cryptocurrency taxation plan is very uncertain as there is no established method for calculating acquisition costs."

He continued, "Securing resources for health insurance premiums is certainly an important issue," but pointed out that "we need to examine whether there is national consensus on this matter."

Meanwhile, Rep. Min Byung-duk, who hosted the seminar, promised to lead efforts to improve virtual asset-related legislation for South Korea's global financial competitiveness.

Rep. Min stated, "Amid global changes in the financial paradigm, Korea's financial sector is also at a crucial turning point. Blockchain technology and digital assets are no longer simple technological experiments but have become key elements driving changes across finance and the economy," adding, "While the Virtual Asset User Protection Act has been implemented, it's now time for 2nd and 3rd phase legislation to foster industry growth."

In particular, Rep. Min expressed concern about the domestic cryptocurrency market, which is institutionalizing more slowly compared to overseas markets. He said, "The US and Japan are actively pursuing stablecoin policies. We need to quickly develop strategies for this," adding, "The current pace of establishing cryptocurrency regulations by domestic policy authorities is too slow. It's time to hurry to avoid losing (market share in the cryptocurrency market)."

He also emphasized the need for close discussions between practitioners and legislative officials. Rep. Min said, "I think clearer legislative directions could emerge if industry experts, National Tax Service officials, and National Assembly members from the Planning and Finance Committee discuss together," adding, "As a member of the Political Affairs Committee, I feel frustrated that we haven't been able to identify issues, set priorities, and establish action plans to ensure Korea keeps up with innovation without falling behind."

Other participants in the seminar included ▲Lim Dong-min, CEO of Indie Icon Market Research, ▲Oh Jong-wook, CEO of Wavebridge, ▲Seo Byung-yoon, Research Director at DSRV, ▲Kim Se-hee, Consultant at INF Crypto Lab, and ▲Kang Ryeon-ho, Attorney at Law Firm Sejong, who presented and discussed topics such as cryptocurrency spot ETFs, blockchain regulation measures, institutional entry into the cryptocurrency market, and the correct terminology for virtual assets.