Will Lee administration push ahead with crypto taxation in 2027?

A representation of the virtual cryptocurrency Bitcoin / Korea Times photo by Shim Hyun-chul

The number of investors holding more than 1 billion won ($722,000) worth of virtual assets on domestic won-based exchanges has surpassed 10,000, according to data from the Financial Supervisory Service (FSS) Sunday.

The base of virtual asset investors is also expanding rapidly, with total users reaching 10.87 million. This means that about one in every five Koreans holds an account across the country’s five major exchanges, including Upbit and Bithumb. Their combined holdings are estimated at 111.65 trillion won.

While both capital inflows and the investor base have grown significantly, profits from coin investments still remain outside the tax framework. This contrasts with the securities market, where reforms are underway to lower the capital gains tax threshold for major shareholders from 5 billion won per stock to 1 billion won.

This has raised questions over whether the Lee Jae Myung administration, which is under pressure to secure revenue amid its expansionary fiscal stance, will move forward with implementing virtual asset taxation as scheduled in 2027.

Data submitted by the FSS to Rep. Park Sung-hoon of the main opposition People Power Party (PPP) showed that there were 10,810 investors holding more than 1 billion won in virtual assets as of Aug. 5.

On average, each of these investors owned 2.23 billion won in assets across the five exchanges. This is more than about 200 times larger than the average holdings of all 10.87 million users, which stands at 10.27 million won per person.

By age, investors in their 50s made up the largest share of those with holdings over 1 billion won, at 3,994 individuals. They were followed by 3,086 investors in their 40s, 2,426 investors aged 60 and older and 1,167 investors in their 30s.

Although only 137 investors were in their 20s, their average holdings of 2.69 billion won per person were significantly higher than those of other age groups.

The figures exclude exchange deposits, which refer to cash placed by investors, meaning their actual asset size may be even larger.

Despite the large amount of capital in the virtual asset market, income from such assets remains untaxed.

Virtual asset taxation was initially planned for 2022 to improve fairness and normalize capital gains taxation on investment returns, but it was postponed first to 2023 and then again to January 2025.

At the end of 2024, after years of debate, the National Assembly decided to implement the Income Tax Act starting Jan. 1, 2025, imposing a 20 percent tax — 22 percent including local taxes — on virtual asset investment income exceeding 2.5 million won.

However, amid continued opposition from investors, Han Dong-hoon, who was leader of the then-ruling PPP, emphasized the importance of supporting young people's wealth accumulation and spearheaded another delay in taxation.

Lee, who at the time was leader of the then-opposition Democratic Party of Korea (DPK), also agreed, leading to the enforcement being pushed back again to after January 2027.

President Lee Jae Myung speaks during a plenary meeting of the Presidential Advisory Council on Science & Technology at the presidential office in Seoul, Friday. Joint Press Corps

However, the likelihood of virtual asset taxation being implemented as scheduled is increasing, as it aligns with the Lee administration’s revenue-raising policy under its expansionary fiscal stance — a key measure in responding to the economic crisis.

The administration is moving swiftly to secure revenue, including reversing corporate tax cuts introduced by the previous Yoon Suk Yeol government.

Moreover, carrying out the government’s 123 national projects is expected to cost more than 200 trillion won, making funding strategies all the more urgent.

“With the DPK and the Lee administration prioritizing revenue collection under an expansionary fiscal stance, virtual asset taxation is likely to go into force in 2027,” Rep. Park said. “During the deferral period, the government should establish a fair taxation framework and introduce practical measures to protect investors.”