Ruling party joins growing calls to delay crypto taxation

The ruling Democratic Party of Korea (DPK) joined opposition lawmakers and industry groups Monday in calling for a delay on cryptocurrency taxation, adding momentum to growing demand to postpone the planned January rollout.

The tax is scheduled to take effect on Jan. 1, 2027, but concerns over the readiness of the tax system have grown as the deadline approaches.

Rep. Min Byung-duk, a senior member of the DPK's policy committee, said that taxation should be pushed back until after the passage of the Digital Asset Basic Act.

“It's not right to start taxation when the basic law has yet to be established. We need a solid foundation to collect taxes in a credible way, and that foundation is not yet in place," the lawmaker said at EastPoint: Seoul 2026, a private conference on virtual assets held Monday in Seoul.

Min pointed to difficulties in tracking income from overseas exchanges and the lack of a system for carrying forward investment losses. He said his concerns were about the timing readiness of the tax system, rather than taxation itself.

The DPK's calls for delay come as the government maintains that the tax should be implemented as scheduled.

On the same day, Finance Minister Lee Hyoung-il backed the planned rollout, saying that the tax law already provides for virtual asset income to be taxed starting next year.

"After reviewing the data, we found that 85 percent of investors hold virtual assets worth less than 5 million won ($3,670). Given the 2.5 million won basic deduction, most of them will either fall below the tax threshold or face only a small tax burden," Lee said during a National Assembly session.

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, 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.

But concerns over the readiness of the tax system have resurfaced among lawmakers and industry groups.

The Digital Asset eXchange Alliance (DAXA), which represents the country's major crypto exchanges, has called for a delay in taxation.

"Pending issues such as infrastructure for determining acquisition costs, the reliability of information on overseas operators and tax rules for different types of transactions need to be addressed in advance," Kim Jae-jin, vice chairman of DAXA, said during a forum hosted by the main opposition People Power Party last week.

Investor opposition is also adding to the pressure on the government.

A survey released Friday by Tiger Research, in cooperation with Chainalysis, found that 73.7 percent of 2,423 virtual asset investors in Korea opposed the taxation plan.