South Korea has once again postponed the implementation of its 20% tax on cryptocurrency gains, marking the third delay since the tax was first proposed in 2021.
The latest decision, announced on 1 December 2024, will push the tax implementation to 2025, following an agreement between the Democratic Party of Korea (DPK) and the ruling People Power Party (PPP) during budget negotiations.
Initially planned for 1 January 2022, the tax has faced repeated postponements due to regulatory concerns and political debates.
NEW: 🇰🇷 South Korea delays its 20% tax on crypto-asset gains by two more years until 2025 pic.twitter.com/dmW9QwDxNr
— Blockworks (@Blockworks_) June 20, 2022
The DPK Floor Leader Park Chan-dae confirmed the delay at a press conference, emphasizing the need for more institutional preparation before enforcing the tax.
“After in-depth discussions on the postponement of taxation on virtual assets, I thought that now is the time for additional institutional overhaul,” he stated.
The proposed delay will be voted on during a plenary session of the National Assembly on 2 December.
History Of Postponements Starting 2021
The 20% tax on cryptocurrency gains exceeding 2.5 million Korean won ($1,784) was first proposed in 2021 to address the growing market for virtual assets. However, concerns over market volatility and a lack of robust infrastructure led to its initial delay to 2023.
Subsequent political pressures and the need for regulatory refinement postponed the tax to 2025, and now further to 2027.
In the latest deliberations, the DPK argued for additional institutional preparation before implementing the tax. “After deep discussion, I thought that the virtual asset tax deferral was a time when additional institutional overhaul was necessary,” said Park Chan-dae, the DPK floor leader, during a press briefing.
This sentiment was echoed by Ko Kwang-hyo, tax policy chief at the Ministry of Economy and Finance, who emphasized the need for more comprehensive market infrastructure before enforcing the tax.
The DPK had initially pushed for a higher tax-deductible threshold of 50 million won ($35,714) to alleviate the burden on smaller investors.
However, the latest decision aligns with the government and ruling party’s proposal for a two-year delay, favoring broader structural improvements.
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South Korean Traders Drive XRP Surge
South Korea is home to one of the world’s most active retail cryptocurrency markets, with exchanges like Upbit ranking among the top five global spot exchanges. Upbit alone saw over $11 billion in trade volume within a 24-hour period, highlighting the market’s robust activity.
Blockchain analytics firm Scopescan reported that /KRW trading volume on the South Korean exchange reached $3.8 billion in the last 24 hours—an amount that outpaced Bitcoin trades by an astounding 11 times.
Similarly, XRP activity on Bithumb, another leading South Korean platform, hit $1.2 billion, accounting for 32% of the exchange’s total trading volume.
Ryan Kim, co-founder of Hashed, attributed this loyalty to the country’s early adoption of XRP, which began as far back as 2014 through campaigns by Ripple Labs.
“Ripple Labs sold XRP to Korean Ajummas with a Ponzi scheme in 2014. It was called ‘Ripple Market Korea.’ There were so many people invested in XRP back then. Probably they made so much money lol. There is a genuine XRP community in Korea, and that’s why Koreans are buying XRP a lot,” Kim said.
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Political Dynamics And Public Backlash
The postponement highlights the political sensitivities surrounding the taxation of cryptocurrency gains in South Korea, a nation with one of the most active retail crypto markets globally.
Opposition parties have criticized the tax as a “youth tax,” arguing that it disproportionately affects younger investors who dominate the country’s crypto market.
“Opinions within the party differed until the end, so we did not reach an overall agreement,” a leadership official said. The PPP argued that the tax would stifle the financial aspirations of young investors, a demographic critical to the country’s economic future.
During the press conference, Park Chan-dae also addressed broader fiscal policies, rejecting proposals to lower the top inheritance tax rate and separate taxation of dividend income. He described these measures as “tax cuts for the ultra-rich,” reiterating the party’s focus on equitable taxation.
The postponement may aligns with broader efforts to regulate virtual assets, including the Digital Assets Basic Act, which is set to govern the issuance and listing of cryptocurrencies.
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