A key decision is shaping South Korea’s crypto policy amid economic debates.
South Korea Agrees to Crypto Tax Delay
South Korea’s Democratic Party announced a two-year postponement of cryptocurrency taxation laws, signaling a compromise in the ongoing debate over digital asset regulation. The decision was disclosed on Dec. 2 by Democratic Party floor leader Rep. Park Chan-dae, following discussions with the ruling People Power Party.
Details of the Tax Moratorium
The deferred law originally planned to tax crypto income starting January. While the ruling party proposed a three-year delay, the Democratic Party settled on two years, reflecting a middle ground. Rep. Park 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’s Growing Role in South Korea
South Korea’s crypto market has become significant, with an estimated 20% of its population—around 10 million people—actively trading or investing in digital assets. The nation’s daily crypto trading volume, averaging 11.3 trillion won ($8.4 billion), surpasses traditional stock exchange volumes like the Korea Composite Stock Price Index (KOSPI). Despite this adoption, the government has taken a cautious regulatory approach.
A Shift in Political Strategy
The Democratic Party, previously focused on raising tax deduction thresholds, now backs the moratorium. The agreement emerged alongside their resistance to unrelated proposed tax reforms favoring the wealthy. For instance, the government aims to lower inheritance tax rates from 50% to 40% and raise asset deduction thresholds for inheritances.
Park emphasized that while the party agreed to the crypto tax delay, they continue opposing cuts that disproportionately benefit affluent individuals.
Debate on Broader Fiscal Policy
The crypto tax delay aligns with broader fiscal reforms in South Korea. In November, Democratic Party leader Rep. Lee Jae-Myung supported repealing a financial investment income tax proposal, aiming to boost the lagging stock market and appeal to over 15 million stock investors.
While the moratorium temporarily eases burdens on crypto traders, it raises questions about balancing digital asset adoption and economic priorities.
Disclaimer:
The information provided on 13Desk is for informational purposes only and should not be considered financial advice. We strongly recommend conducting your own research and consulting with a qualified financial advisor before making any investment decisions. Investing in cryptocurrencies carries risks, and you should only invest what you can afford to lose. 13Desk is not responsible for any financial losses incurred from your investment activities.
