South Korea Plans to Delay Crypto Tax to 2028
The South Korean government is considering delaying the implementation of a cryptocurrency gains tax by three years, potentially moving the start date from January 2025 to January 2028. This decision comes in response to investor dissatisfaction, market instability, and concerns over the readiness of the current tax framework. The proposal, submitted by the ruling People Power Party, argues that the current sentiment towards crypto assets is deteriorating and that the higher risks associated with crypto investments compared to stocks could drive many investors away if a tax is imposed.
The proposed 20% tax on cryptocurrency gains has faced significant opposition from investors and industry experts. Initially set to take effect in January 2022, the tax has already been postponed twice due to backlash and concerns over insufficient system and institutional preparation. The Financial Services Commission (FSC) reported a significant increase in the number of crypto investors, reaching 6.45 million as of May 2024. Critics of the delay argue that the government has not done enough to prepare for the tax's implementation, while supporters believe the postponement will provide more time to develop a comprehensive and practical tax framework.
The decision on the proposed delay is expected to be finalized when the government announces next year's revised tax law. Market insiders warn that imposing the tax next year could lead to a further decline in trading volumes and destabilize the market. Opposition leaders have criticized the repeated delays, emphasizing the need for better preparation and institutional readiness to handle the complexities of taxing cryptocurrency gains. The outcome of this proposal will be closely watched by the global cryptocurrency community, given South Korea's significant role in the digital asset market.
