Lawmakers Move to Abolish 22% Crypto Gains Tax
South Korean lawmakers are advancing a proposal to completely abolish a planned 22% tax on cryptocurrency profits. The move aims to correct what legislators describe as an unfair disadvantage for digital asset investors, particularly after a similar tax on gains from traditional financial products was repealed. Proponents argue that scrapping the tax is essential for the domestic crypto industry's growth and would align tax policy more consistently across different asset classes. If successful, the abolition would likely invigorate local trading and investment, bolstering demand within a key global crypto market.
Tax Agency Prepares for 2027 Rollout with $2M AI System
In direct contrast to the legislative push for abolition, South Korea's National Tax Service (NTS) is proceeding with implementation plans. The agency has initiated a bid for a 3 billion Korean won (approximately $2 million) project to build an AI-powered system designed to track and analyze cryptocurrency transactions for tax purposes. This platform is intended to support the enforcement of the 22% levy on annual crypto profits exceeding 2.5 million won ($1,700).
The crypto tax framework, first passed in 2020, has already been postponed three times due to industry opposition and political debate. The NTS's actions signal a bureaucratic commitment to a January 2027 rollout, with system testing planned for later this year. This creates a state of policy conflict, leaving investors and exchanges in a prolonged state of regulatory uncertainty.
Seoul Tightens Scrutiny on Illicit Crypto Holdings
While the tax debate continues, South Korean authorities are hardening their stance on the illicit use of digital assets. The National Police Agency is drafting new regulations to standardize the seizure and management of cryptocurrencies, including privacy coins. This initiative addresses operational gaps and aims to secure confiscated assets more effectively. Over the last five years, police have seized virtual assets worth approximately 54.5 billion Korean won, with Bitcoin accounting for 50.7 billion won of the total. This separate enforcement track demonstrates a broader government effort to integrate crypto into its legal framework, distinguishing between legitimate investment and criminal activity.
