South Korea’s National Assembly votes to delay the crypto tax to 2027, citing opposition and market challenges.
Trading volumes hit $254 billion in November, signaling robust retail interest despite tax deferral debates.
Failed tax threshold amendment leaves smaller traders exposed, while larger investors gain preparation time.
South Korea’s government has decided to delay the implementation of its cryptocurrency taxation policy until 2027. The South Korean National Assembly approved the postponement with 204 members voting in favor, 33 against, and 38 abstaining. The proposal, initially slated for 2022, had already been postponed to 2025. The latest delay reflects ongoing opposition to the 20% tax plan on crypto earnings and the need for further planning.
Political Backing and Divided Opinions on the Tax Policy
The postponement has sparked political controversy, gaining support from the ruling People Power Party and the opposition Democratic Party of Korea. Despite President Yoon Suk-yeol’s declaration of martial law on December 3, lawmakers united to approve the delay.
Efforts to increase the tax threshold from 2.5 million won ($1,791) to 50 million won ($35,826) to protect smaller investors failed, leaving smaller traders vulnerable to future taxation. Critics argue the delay gives larger investors additional time to prepare while doing little for smaller market participants.
Record Trading Volumes Amid Regulatory Uncertainty
The delay coincides with a surge in cryptocurrency trading activity in South Korea. Reports reveal that trading volumes reached a record $254 billion in November 2024, reflecting heightened investor interest. This marks a significant recovery from the lows seen in 2022 and 2023. The figures underline the country’s robust retail interest in digital assets despite the lingering uncertainty surrounding regulation and taxation.
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The continued deferral highlights South Korea’s struggle to balance fostering innovation with imposing regulatory oversight. While the move benefits institutional players, retail investors remain exposed to market volatility. Analysts suggest that the delay could sustain interest in digital assets and provide room for further discussions on equitable taxation policies.