Finance minister nominee backs January crypto tax rollout despite industry, opposition pushback
Lee Hyoung-il, nominee to head the Ministry of Finance and Economy, answers questions from reporters, Sept. 3, as he arrives at an office set up at the Korea Deposit Insurance Corp. in central Seoul to prepare for his confirmation hearing. Yonhap
Lee defends classifying crypto income as miscellaneous income as 'appropriate'
The nominee to head the Ministry of Finance and Economy expressed his intention on Sunday to implement the cryptocurrency tax next January as scheduled, despite pushback from both industry players and opposition lawmakers.
In written materials submitted to the National Assembly ahead of a confirmation hearing slated for Tuesday, Lee Hyoung-il, who currently serves as first vice finance minister, noted that specific tax rules would be finalized through a National Tax Service public notice by year-end, ensuring taxpayers face no confusion when filing.
He also defended classifying crypto asset income as miscellaneous income under the current tax framework, calling it an “appropriate” approach to applying taxpayer-friendly measures, such as a basic deduction and a single tax rate.
“Given that stock trades involving major shareholders, foreign equities and unlisted shares, along with transaction taxes, are already subject to taxation, extending tax rules to crypto assets is essential for tax fairness,” he said.
The crypto tax regime treats profits from transferring or lending digital assets as miscellaneous income, levying a 20 percent tax rate. Taxable amounts apply to net annual gains after deducting a basic allowance of 2.5 million won ($1,860), with no provision to carry forward losses into future tax years.
While initially set for a 2022 rollout, the policy faced three separate delays due to inadequate tax infrastructure, market volatility and an unfinished investor protection framework. Under current law, the tax is slated to cover transactions starting in 2027, making May 2028 the actual period for filing and payment.
Yet, industry officials argue that the timeline remains premature, pointing out that infrastructure and cross-border information-sharing mechanisms are still far from ready.
Earlier this month, the Digital Asset eXchange Association (DAXA), representing the country’s major crypto exchanges, drew up an industry position paper, highlighting the complete absence of a standardized digital network between regulators and exchanges, as well as a severe shortage of preparation time.
DAXA stressed that, unlike traditional financial firms operating on uniform IT networks, crypto exchanges rely on disparate internal data architectures and manage complex records, such as on-chain wallet addresses and airdrops, that cannot currently be integrated into automated regulatory systems.
“We urgently need adequate lead time to construct and test IT infrastructure while setting up standard operating protocols,” DAXA said.
Ambiguity surrounding the scope of data inquiries was raised as another key concern. DAXA warned that if data requests lead to privacy-related complaints, the fallout will hit exchanges directly rather than government authorities.
The group further warned that treating crypto proceeds as miscellaneous income risks triggering legal disputes both domestically and internationally. Additionally, they argued that imposing taxes on digital assets while eliminating the financial investment income tax creates a glaring imbalance.
“The industry fully agrees that crypto taxation is inevitable in the long run,” DAXA said. “However, the start date should only be reconsidered once technical infrastructure and data-sharing systems have been thoroughly tested and early regulatory reforms have settled down.”
Lawmakers from the main opposition People Power Party have also introduced bills to either scrap or delay the crypto tax. Rep. Song Eon-seog put forward a bill to eliminate the tax clauses entirely, while Rep. Jung Sung-kook proposed pushing the effective date back to January 2030.
On a separate note in his parliamentary submission, Lee also elaborated on the operational plans for the upcoming Korean strategic sovereign wealth fund, projected to launch with over 20 trillion won, estimating that investable liquid assets for next year are expected to reach around 1 trillion won, driven by direct cash capital and public entity dividend payouts.
According to the ministry, the fund’s initial capital structure will rely mainly on more than 16 trillion won in noncash equity contributions from government-held stakes in entities such as the Korea Development Bank.
The government plans to set up a dedicated strategic investment account within the Korea Investment Corp. (KIC) before expanding and restructuring it into a full-scale sovereign wealth fund next year.
Authorities expect the fund to supply long-term, patient capital to core strategic sectors while leveraging the global network and market credibility of the KIC to draw in private and international capital.