Relieved by Crypto Tax Deferral, but "Tax System Must Be Established in the Time Remaining"

The industry welcomed the government's decision to defer until 2029 the taxation of income from virtual asset investments, which had been scheduled to take effect next January. However, some said further discussion is needed on how to tax dollar stablecoins and other similar assets.

Deputy Prime Minister and Minister of Finance and Economy Lee Hyungil briefs reporters on virtual asset taxation at the Government Complex Seoul in Jongno-gu, Seoul, on Nov. 5, 2026. Photo by Cho Yongjun

Lee Hyeong-il, Deputy Prime Minister and Minister of Finance and Economy, said at a briefing on virtual asset income taxation held at the Government Complex Seoul on the 5th, "We intend to consult with the National Assembly and pursue a plan to defer virtual asset taxation, scheduled for next year, by two years." He added, "We took into comprehensive consideration concerns that the domestic market could be placed at a relative disadvantage compared with overseas markets, as well as views that changes resulting from the enactment of the Digital Asset Basic Act should be reflected in the tax system."

Virtual asset taxation applies a 22% tax rate, including local income tax, to investment income exceeding KRW 2.5 million. It was initially scheduled to take effect in January 2022 but has been postponed three times due to reasons including insufficient tax infrastructure and investor opposition. This time, it was deferred amid concerns that the tax system would struggle to cover various trading methods, such as staking.

A representative of the virtual asset industry said, "It is welcome that the government has quickly reflected the market's views and postponed taxation. Now that we have gained two years, I hope there will be an intensive discussion on how to develop the tax system going forward."

The need to establish a detailed tax system was also raised. The representative said, "We need to establish classification criteria, including how to categorize and determine the tax treatment of various transactions such as staking and lending. New trading methods may emerge in the future, but at the very least, we need to classify the trading methods currently in use."

Kim Seonggon, executive vice chairman of the Korea Blockchain Industry Promotion Association (KBIPA) and an adjunct professor at Hanyang University's Graduate School of Public Policy, also said, "There was not enough justification for pushing ahead with taxation." He explained, "Fairness is a major concern for people in their 20s and 30s. There was also an issue of fairness in taxing income from virtual asset investments while not taxing gains from stock investments."

In addition to establishing tax infrastructure, questions remain over how to tax stablecoins. Although foreign exchange gains are not taxed, gains from exchange rate movements involving dollar stablecoins could be subject to taxation.

Jo Manhee, head of the Tax and Customs Office at the Ministry of Finance and Economy, said that day, "Some say stablecoins are difficult to tax because their prices are fixed, while others say there may be grounds for taxation if their prices diverge. This is something the working group plans to discuss." He added, "We currently consider dollar stablecoins used as a means of payment to involve an exchange, which is treated as a transfer under tax law, and therefore believe the resulting income would qualify as capital gains."

In response, Vice Chairman Kim Seonggon said, "How many people use stablecoins for investment?" He pointed out, "If the dollar rises from 1,300 won to 1,400 won, someone who makes a 100-won gain does not pay taxes. It would be unfair if someone holding dollar stablecoins had to pay taxes."

This content was produced with the assistance of AI translation services.