- South Korean opposition party submits a bill to abolish the 2027 tax on cryptocurrency gains above 2.5 million won, citing unequal treatment compared with other financial investments such as stocks
- National Tax Service is developing an AI system to track crypto transactions while the ruling Democratic Party reviews the proposal but has not previously given it serious consideration
A new political proposal in South Korea has put the spotlight back on how the country will tax digital assets. A bill submitted by the main opposition People Power Party seeks to eliminate the local tax on cryptocurrency gains that is scheduled to take effect in 2027. The initiative, centered on arguments over tax equity and classification of digital assets, arrives as the South Korean crypto market continues to rank among the largest in the world.
Opposition Party Moves to Scrap Crypto Tax Plan
On Thursday, the right-wing People Power Party introduced a bill to revise the Income Tax Act and cancel the planned taxation regime for cryptocurrency profits. The proposal, reported by local outlet Digital Asset, is sponsored by Song Eon-seok, who serves as the party’s floor leader. If passed, it would fully remove the forthcoming tax on gains from trading digital assets.
Under current law, South Korea intends to impose a combined tax rate of up to 22% on cryptocurrency trading profits that exceed 2.5 million Korean won, or about $1,665. This rate includes a 20% national income tax along with an additional 2% local tax. The measure was initially set to begin in 2022 but has already been delayed three times after pushback from both the industry and retail investors. The revised start date is now Jan. 1, 2027.
Despite the repeated postponements, tax authorities have been preparing for the rule’s implementation. The National Tax Service recently disclosed that it is building an AI-based system designed to monitor and analyze cryptocurrency transactions in order to support the planned tax collection on digital asset gains.
Tax Fairness Debate in the South Korean Market
The new bill places fairness across asset classes at the center of the debate. Its backers argue that taxing only cryptocurrency income while exempting other financial investments would create an uneven system. In late 2024, South Korea abolished a broader income tax on gains from financial products such as stocks, easing the burden on many traditional investors. Critics of the current crypto tax framework say that keeping a separate income tax solely for digital asset traders is inconsistent with that policy shift.
The proposal also refers to recent guidance from the U.S. Securities and Exchange Commission, which it describes as treating most cryptocurrencies as commodities. On that basis, the bill argues that digital assets should not be regulated, or taxed, in the same way as securities. This line of reasoning underscores ongoing global discussions about how to classify and tax cryptocurrencies, and whether they should be grouped with traditional financial instruments.
Within the political arena, the ruling Democratic Party has signaled only cautious interest in the idea. Kim Han-gyu, the party’s senior deputy floor leader for policy, has said the left-wing party will examine the bill. However, he also indicated that the measure had not been seriously considered within Democratic Party ranks before the opposition submitted its proposal.
Scale of the South Korean Crypto Market
The legislative discussion unfolds against the backdrop of a substantial domestic digital asset sector. South Korea has one of the world’s largest cryptocurrency user bases, with nearly one in five residents participating as users or traders. That penetration level makes any change in the tax treatment of digital assets potentially significant for a large share of the population.
Data from the Financial Services Commission show the size of the market in financial terms. As of June 20, 2025, the total capitalization of crypto assets in the country stood at 95.1 trillion won, equivalent to around $63.4 billion. This scale has helped turn issues such as taxation, investor protection, and regulatory clarity into recurring topics in national policy debates.
A shift in tax rules could influence several groups:
- Retail investors, who would be directly affected by any levy on trading gains.
- Crypto service providers, which must adapt systems to support tax reporting and compliance.
- Government agencies, including the National Tax Service, which are investing in technology to oversee the sector.
For now, authorities continue preparing for the 2027 start date, while legislators weigh whether that framework should remain in place or be abandoned. The broader regulatory backdrop also includes debates over crypto links in the banking sector and how digital asset oversight should evolve as the market matures.
Conclusion
The People Power Party’s bill to abolish the 2027 digital asset tax has reopened questions about how South Korea should treat cryptocurrency income compared with other investments. With a planned 22% tax on gains above 2.5 million won, an AI-based monitoring system under development, and a large share of the population active in the crypto market, the outcome of the tax debate could have wide-ranging effects. The ruling Democratic Party’s review of the proposal will help determine whether the current plan proceeds, is revised, or is ultimately discarded. In the wider policy landscape, questions about how digital assets should be classified, how lawmakers set clear rules for crypto and stablecoins, and how crypto law is being reshaped continue to shape the global conversation.
Disclaimer
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