South Korea’s Democratic Party (KDP) has agreed to delay the implementation of the country’s crypto capital gains tax by two more years. Initially set to take effect in January 2025, the tax will now be postponed until 2027.
Political Shift in Crypto Tax Debate
At a press conference on December 1, KDP floor leader Park Chan-dae announced that the party had reached a consensus with the ruling People’s Power Party (PPP) and the government to implement a two-year moratorium on the digital asset tax.
This agreement represents a significant policy reversal for the KDP, which had previously opposed any delay. As recently as November 20, the KDP criticized the PPP’s proposal to defer the tax as a “political trick” meant to win favor during election cycles. The KDP had pushed to introduce the tax in 2025 while proposing a higher threshold—raising the taxable limit from $1,800 to $36,000—to minimize the impact on smaller investors.
Ongoing Crypto Tax Postponements
South Korea’s plans to tax cryptocurrency gains have faced repeated delays since the policy was first proposed in 2021. Initially scheduled for implementation that year, backlash from crypto industry stakeholders led to a postponement until 2023. Concerns over the potential negative impact on investors caused further delays, first to 2025, and now to 2027.
Under the proposed law, crypto investors will be subject to a 20% tax on digital asset gains above the taxable threshold once it is enacted.
Political Parties Address Crypto Regulation
The PPP has consistently advocated for a cautious approach to taxing crypto gains, citing concerns about market stability and the potential for investors to exit the market prematurely. The ruling party initially proposed a three-year grace period, seeking to defer the tax until 2028. However, the recent compromise with the KDP has set the timeline at 2027.
The delay aligns with the PPP’s election campaign promises, which emphasized the need for balanced crypto regulation that supports industry growth while safeguarding investor interests.
