Main opposition pushes to ease, not postpone, tax on crypto gains

The main opposition Democratic Party of Korea is planning to pass a bill that raises the threshold for a planned tax on virtual asset-related gains, up to 50 million won ($35,800) from the previously planned 2.5 million won, sources said Thursday.

The original scheme for crypto tax gains would have taxed crypto-related income of over 2.5 million won per year starting January 2022, but it has been pushed back twice to January 2025.

Main opposition Rep. Jin Sung-joon said the party would carry out the tax scheme on virtual assets as planned in January next year, while raising the tax exemption threshold to 50 million won.

A main opposition member of the National Assembly’s Strategy and Finance Committee, who requested anonymity, said the 50 million won threshold was decided based on the data that the majority of the country’s cryptocurrency investors were in their 20s and 30s.

“The Democratic Party members in the Assembly’s Strategy and Finance Committee have come to a consensus to adopt the tax scheme with a higher threshold to protect the younger generation, who make large investments in virtual assets,” the lawmaker said.

But the lawmaker said that the 50 million won-threshold has yet to be confirmed, hinting that they could either raise or lower the bar depending on the circumstances.

“The threshold was decided in tandem with (the now-scrapped) financial income tax scheme. Further discussions could take place regarding the numbers,” the lawmaker explained.

The Cabinet and the ruling People Power Party, in recent days, have called for the main opposition, which has a majority in the 300-seat parliament, to agree to delay the adoption of the tax scheme by another two years.

“We plan to make sure that the (virtual asset tax scheme) is delayed by two years, taking account of the public opinion,” People Power Party Chair Han Dong-hoon said during a Supreme Council meeting at the Assembly on Thursday.

“I agree that taxation must exist where there is income, but the taxation must take effect in an environment that is fair and ready. The majority of over 8 million crypto investors in Korea are young, which is why we must think about how we will deal with the chaos when we levy tax in a market that is not fully ready (to accept such change),” he added.

As of Thursday noon, an online petition uploaded on the National Assembly website on Tuesday amassed over 59,000 signatures supporting the two-year delay of the virtual asset tax scheme.

The move comes weeks after Democratic Party Chair Lee Jae-myung agreed to the People Power Party’s calls to scrap the financial investment income tax, which was set to levy a 20 percent tax on capital gains of more than 50 million won next year, in tandem with the virtual asset tax scheme. It had been delayed by nearly four years since its passage in the National Assembly in 2020.

Lee cited the need to boost the country’s undervalued stock market as the reason for his agreement with the Yoon Suk Yeol administration and the ruling People Power Party’s proposal to scrap the scheme.

Bitcoin, the world's biggest and best-known cryptocurrency, soared to a record high of over $96,000 as of Thursday noon, on a report that President-elect Donald Trump's social media company was in talks to buy crypto trading firm Bakkt. The report fueled investor hopes that it would be an era of a friendlier regulatory approach toward virtual assets under the second Trump administration.