South Korea Puts Crypto Tax on Hold: Aiming for Fair Rules First

South Korea's leading political group, the People Power Party, has proposed a further two-year postponement in taxing cryptocurrency earnings. This suggestion comes as the country approaches its general elections in April. The party insists on the necessity of first crafting a solid set of rules for the cryptocurrency market before moving ahead with tax enforcement. Originally, the government aimed to levy a 20% tax on crypto profits over 2.5 million Korean won (around $1,875) from January 2023. This plan was already delayed to 2025 to give space for regulatory groundwork. Now, with elections on the horizon, the People Power Party seeks to extend this pause to 2027, emphasizing regulation over taxation in their electoral promises. They plan to include this tax delay in their campaign commitments by month's end.

The party also wishes to align the crypto tax threshold with that of the stock market at 50 million won ($37,400), arguing for a more equitable tax system. This contrasts sharply with the current lower limit for crypto earnings. Additionally, the Ministry of Economy and Finance is exploring the idea of abolishing income tax on cryptocurrencies entirely as part of a wider initiative to cut taxes on financial investments. Yet, the People Power Party's current focus is solely on postponing tax implementation, not eliminating it. Discussion on how and when to tax cryptocurrencies in South Korea is ongoing. With the forthcoming elections, these conversations are increasingly critical. The government's primary aim is to establish a comprehensive regulatory framework before considering taxation. This includes setting standards for key industry aspects such as token listings and the role of custody providers.

Establishing this regulatory foundation is seen as crucial for ensuring that cryptocurrency usage and investment comply with legal standards. It also aims to foster innovation within the sector by providing clear guidelines. In summary, before introducing any tax measures, South Korea is focused on developing a robust regulatory environment for the cryptocurrency industry.