South Korea Delays Crypto Taxation Laws
South Korea’s Democratic Party has agreed to delay the implementation of crypto taxation laws, leading to a temporary truce in the ongoing debate over digital asset regulation in the country, as reported by the Korean Herald on Dec. 2.
Agreement on Taxation Delay
Democratic Party floor leader Rep. Park Chan-dae announced the agreement to postpone the taxation of crypto profits by two years during a press conference. He stated:
“We have decided to agree to a two-year moratorium on the implementation of the cryptocurrency taxation proposed by the government and ruling party.”
Crypto Trading in South Korea
Approximately 20% of South Korea’s population, nearly 10 million people, are engaged in crypto trading or investment. Despite this high level of adoption, the country has maintained a cautious approach towards the industry. The nation’s average daily crypto trading volume is estimated at 11.3 trillion won ($8.4 billion), often surpassing its stock exchange, the Korea Composite Stock Price Index (KOSPI).
Political Implications
The law imposing a tax on digital asset income was initially set to take effect in January. The delay aligns closely with a government proposal, although the ruling People Power Party sought a three-year moratorium. Park’s opposition party agreed to a two-year delay but vowed to block new tax cuts for inheritances and gifts, claiming they disproportionately benefit the wealthy.
The agreement signifies a shift in the Democratic Party’s stance, as they previously advocated for raising the threshold for crypto-related tax deductions instead of delaying the law altogether. Despite conceding on crypto taxation, Park emphasized his party’s opposition to proposed reforms to inheritance and gift taxes.
Debate on Fiscal Policy
The tax debates coincide with broader discussions on South Korea’s fiscal policies. Last month, Democratic Party leader Rep. Lee Jae-Myung reversed course on a proposed tax on financial investment income, opting to support its repeal. This move aimed to revitalize the country’s stock market and appease millions of investors.
“I could not ignore the voices of 15 million financial stock investors who might be affected by structural vulnerability.”
The delay in crypto taxation provides temporary relief to digital asset traders but raises questions about the government’s ability to balance competing fiscal priorities.
