South Korea's Kim Min-seok Sets Year-End Deadline on Crypto Tax Decision

Kim Min-seok Sets a Year-End Deadline

South Korea's ruling Democratic Party will decide within this year whether to enforce or delay the country's crypto tax, party leader Kim Min-seok said on Thursday. Speaking on the party's YouTube program “Minty 07,” Kim said the question “must be sorted out this year” and disclosed that he had proposed a final review to Deputy Prime Minister and Finance Minister Lee Hyoung-il, who visited the National Assembly on Wednesday. “Whether we tax as planned or reinforce the system in some way, is it not time to start a focused discussion?” Kim said.

The levy was created in a 2020 amendment to the Income Tax Act and has already been postponed three times. Under the current design, annual income from virtual asset transfers and lending above a 2.5 million won basic deduction is taxed at a combined 22% rate of other income tax and local income tax. If not delayed again, it takes effect in January 2027, and the government is still preparing administrative procedures on that timetable.

Kim's push lands on a party that is split. Some lawmakers argue a fourth delay would damage policy credibility, while others question whether reporting systems are genuinely ready. A ruling-party policymaking official said no direction has been decided and that party-government consultations have not yet started.

Opposition positions diverge. The People Power Party leans toward another delay: Representative Lim I-ja told Thursday's audit that statutory tax criteria and taxation infrastructure remain incomplete, and that compliance buildouts under the National Tax Service notice, from KYC records to transaction reporting, take an estimated six to nine months. The Rebuilding Korea Party rejects a fourth postponement outright. Cho Kuk, head of its policy research institute, wrote on Wednesday that deferring asset taxation “is like postponing efforts to resolve inequality” in an era of serious asset inequality.

Digital Asset Basic Act in Final Negotiation

Financial Services Commission Chairman Lee Eog-weon told the same audit that the Digital Asset Basic Act, the framework bill governing exchanges and stablecoins, has entered its final negotiation stage. Responding to People Power Representative Song Eon-seok, who argued taxation should wait until the basic law defines what digital assets are, Lee said the related legislation is under final coordination and will be brought forward for debate as soon as possible. On the tax itself, he offered no position beyond noting that various opinions are being collected.

The bill's content is taking shape. Government negotiators are weighing a cap that would limit major shareholders of crypto exchanges to 15% to 20% stakes, and a phased opening of won-denominated stablecoin issuance beginning with consortiums in which banks hold a majority. Officials aim to complete the government version by the end of this month, after which party-government consultations would carry it into the National Assembly as a lawmaker-sponsored bill.

The tax timeline moves in parallel. The National Tax Service said on October 13 that the official notice specifying taxation criteria is expected in November after consultation with the finance ministry. Four bills now sit in the National Assembly seeking to delete or delay the levy: Song's repeal bill, two separate postponement bills, and a ruling-party proposal tabled on October 16 that would push the effective date to January 1 of the second year after each jurisdiction begins exchanging crypto transaction data under the OECD's Crypto-Asset Reporting Framework. Its sponsor argues that with CARF exchange starting only next year and the United States joining in 2029, taxation before then would fall disproportionately on users of domestic exchanges.

Exchanges have made their own case. On October 20 the finance ministry met Dunamu, Bithumb and Coinone, operators behind South Korea's top crypto exchanges, together with the industry association DAXA. Operators asked for clear tax criteria, a preparation period to build reporting systems, and fairness toward users of overseas platforms, where records held in foreign crypto wallets are difficult to verify. The first vice minister presiding said the principle that income should be taxed deserves respect, but taxation infrastructure and market rules must be in place at the same time.

A Fourth Postponement Is Live

Read together, the two tracks give Kim a clean decision frame and the arithmetic favors another delay. Operators say they need six to nine months to build reporting systems, while the January 2027 start leaves roughly ten weeks from now. The November tax notice is the checkpoint to watch: if it slips or draws exchange objections, the year-end decision most likely lands on postponement. Passage of the Basic Act would give lawmakers a face-saving pairing, answering Song's sequencing argument without conceding to Cho Kuk's camp. Whether the government draft appears by the end of October will tell us which way the party-government consultation breaks.