South Korea to Tax Crypto Gains Above $1,800 at 22%, Fueling Backlash Among Young Investors

“Crypto investors are younger and less organized, so they are seen as the easiest group to tax.”

Data released in March by the Financial Intelligence Unit showed there were 11.13 million user accounts eligible for trading as of the end of last year.

By age group, people in their 30s accounted for 26.8% of those accounts, while those in their 20s and younger made up 19.0%. Combined, they represented 45.8% of the total.

Another investor, Park, 36, said the policy amounts to discrimination between asset classes.

“Stocks get a pass while crypto is taxed, even though both generate investment income,” Park said. “There is also no loss carryforward. If I lost 50 million won ($36,000) last year and made 30 million won ($21,600) this year, I am still down 20 million won ($14,400), but I would still have to pay tax.”

“That’s not a tax on income. It’s a penalty on trading.”

Petitions opposing virtual-asset taxation have continued to appear on the National Assembly’s public petition platform.

In a petition posted on July 31, the petitioner said the government’s proposed crypto tax had completely lost the core tax principles of “fairness” and “effectiveness,” calling it punitive regulation.

The petitioner also argued that the government had supported the stock market through various policy measures and even expanded National Pension Service investment, while neglecting the virtual-asset market despite heavy losses suffered by most investors.

◇ Government Says It Still Plans to Start Taxing Crypto Next Year

The government says it will proceed without any further delay.

Speaking at the National Assembly’s Strategy and Finance Committee on July 29, Koo said the government was, for now, moving ahead with taxation from next year as scheduled.

On the issue of loss carryforwards, Koo said stock investment losses also cannot be carried forward. He added that classifying crypto income as miscellaneous income already provides certain benefits, and that the government could revisit the issue after implementation if necessary.

The National Assembly Research Service has also raised concerns that full-scale taxation could lead to legal disputes.

According to political sources, the legislative research body pointed to the need for more detailed tax standards for newer forms of acquisition such as staking and airdrops, the lack of loss carryforwards, and the possibility of double taxation on income from overseas exchanges.

Calls to delay or repeal the tax have also continued within the People Power Party.

Lawmaker Song Eon-seok said at a blockchain event on July 22 that a quick decision was needed on whether to delay or abolish the tax. Scrapping the income tax could provide momentum for further industry growth, he said.

Lawmaker Park Soo-young told reporters on August 3 that he had consistently opposed taxation of digital assets and that a strong response was again needed.

Lawmaker Jeong Seong-guk has introduced an amendment to the Income Tax Act that would delay the tax by three years.

A National Tax Service official said the agency was moving ahead without disruption in securing data through its systems and institutions in time for enforcement.

Addressing concerns that assets moved to overseas exchanges would be harder to trace, the official said cross-border crypto-asset information would begin to be exchanged next year through the Crypto-Asset Reporting Framework, or CARF.

If foreign tax authorities obtain exchange data in their jurisdictions, that information can be shared with South Korea, the official said. The country is gradually building a framework to secure data from overseas exchanges.

Lee Jeong-woo, Hankyung.com reporter krse9059@hankyung.com