South Korea Delays Digital Asset Tax to 2027 Amid Industry Pushback

The 20% crypto gains tax, originally set for 2022, gets pushed back again. Industry lobbying wins another round, but the lack of a clear tax framework creates its own problems.

Another year, another delay

South Korea's National Assembly voted in December 2025 to delay the implementation of a 20% tax on digital asset gains to January 1, 2027. The tax was originally scheduled to take effect in January 2022, was pushed to 2023, then to 2025, then to 2026, and now to 2027. Each delay has followed the same pattern: industry opposition, political calculation, last-minute legislative amendment.

The tax as designed would apply a 20% rate (plus local income tax, bringing the effective rate to 22%) on annual crypto gains exceeding KRW 2.5 million (approximately $1,900). The threshold is low by international standards, meaning most active traders would be affected.

Why the delay keeps happening

South Korea has an estimated 6 to 7 million crypto investors out of a population of 52 million. That's roughly one in eight adults. In a democracy with tight electoral margins, taxing crypto is politically radioactive.

The ruling People Power Party (PPP) championed the latest delay, framing it as necessary to "align with international best practices" and allow time for proper infrastructure development. The opposition Democratic Party, which had supported implementing the tax on schedule, ultimately voted for the delay as well, unwilling to be painted as anti-investor ahead of local elections.

The Korean Blockchain Association and major exchanges including Upbit and Bithumb lobbied hard for postponement. Their argument: taxing crypto gains while the regulatory framework for digital assets remains incomplete creates compliance chaos. That's a legitimate concern, though it conveniently also preserves the current tax-free status that makes Korean exchanges attractive.

The infrastructure gap is real

To be fair to the delay's proponents, Korea's tax infrastructure for digital assets is genuinely incomplete. The National Tax Service (NTS) does not yet have automated systems for tracking crypto cost basis across exchanges. Korean exchanges report transaction data, but there's no unified format for calculating gains and losses across platforms.

Japan, which implemented its own crypto tax in 2017, has spent years refining its reporting system and still faces compliance issues. Korea's NTS would need to build similar infrastructure from scratch, something it has had since 2022 to do and hasn't finished.

The KRW 2.5 million threshold adds complexity. At roughly $1,900, it captures casual investors who may lack the sophistication (or the accounting software) to track cost basis accurately across multiple wallets and exchanges. A higher threshold, perhaps KRW 50 million, would reduce the administrative burden while still capturing significant gains. The government has resisted raising it.

What traders and exchanges face now

The delay preserves the status quo: crypto gains in Korea remain untaxed for domestic investors. Foreign investors already face withholding taxes on gains from Korean exchanges under existing rules, creating an asymmetry the government has not addressed.

Korean exchanges benefit directly from the delay. Upbit, which dominates with over 70% of domestic trading volume, would likely see reduced activity if the tax took effect. Trading volumes on Korean exchanges dropped noticeably in late 2025 when the tax appeared imminent, then rebounded after the delay announcement.

For the broader Financial Services Commission agenda, the delay complicates efforts to position Korea as a serious digital asset jurisdiction. Singapore taxes crypto gains at standard income tax rates. Japan taxes them as miscellaneous income. Australia treats them as capital gains. Korea's repeated inability to implement any tax at all signals regulatory indecision rather than investor friendliness.

Will 2027 be different?

Probably not. The same political dynamics that produced four delays will exist in late 2026 when the National Assembly faces the question again. The PPP has no incentive to alienate millions of crypto-holding voters. The Democratic Party has shown it won't die on this hill either.

The most likely outcome: another delay, perhaps reframed as "permanent deferral" or replaced with a modified structure featuring a much higher threshold. Korea's crypto tax is becoming less a policy question and more a recurring political ritual.