South Korea's People Power Party Proposes 2030 Delay for Bitcoin (BTC) Tax

People Power Party Targets 2030 Delay in Tax Bills

The People Power Party (PPP) has escalated its legislative offensive against the forthcoming digital asset tax, filing multiple bills to either dismantle or postpone the levy. A bill led by lawmaker Song Eon-seok seeks to remove the taxation clause from the Income Tax Act entirely, while a separate proposal from Jeong Seong-guk would delay the tax until 2030. A third amendment, expected next week from Kim Sang-hoon, would push the effective date two years later. Under current rules, any annual net income exceeding 2.5 million won from digital asset transfers or lending faces a 20% tax, rising to 22% with the local surtax. The PPP contends that tax authorities cannot reliably track transactions on overseas exchanges or personal wallets, leaving acquisition costs unverifiable and placing an unfair burden on domestic exchange users. The party also points to the repeal of the financial investment income tax, arguing that taxing crypto alone breaches horizontal equity. Park Soo-young, another PPP lawmaker, raised similar concerns during a March meeting with the country's top five exchanges, questioning the tax office's preparedness. The opposition's persistence underscores the unresolved infrastructure problem. A research report commissioned by the National Assembly Budget Office concluded that the current system, which relies on reports from digital asset businesses, cannot adequately handle the anonymity and decentralization of crypto. It specifically noted the lack of standards for income from airdrops, staking, and decentralized finance, creating uncertainty for taxpayers. The PPP's push comes despite three previous delays, with the government and the Democratic Party maintaining that the tax must start on January 1, 2027. Without a last-minute amendment, anyone receiving digital asset income from that date will owe tax, although the exact treatment of overseas and DeFi transactions remains foggy. The PPP's resistance is rooted in the belief that the tax would be unenforceable and inequitable without a robust transaction data network.

FSC Accelerates Digital Asset Framework Act Talks

While the tax debate unfolds, the Financial Services Commission (FSC) is fast-tracking work on the Digital Asset Framework Act, the second phase of South Korea's virtual asset regulation. Chairman Kim Byoung-hwan told a National Assembly committee on Aug. 24 that the agency will intensify consultations to meet lawmakers' call for a fall passage. Democratic Party lawmaker Lee Kang-il pressed Kim for a concrete timeline, pointing to rapid regulatory advances in the United States, including the SEC's categorization of digital assets and CFTC's moves on Bitcoin perpetual futures. Kim said the government would “do its best” to speed up the process, though a firm submission date remains unannounced. The proposed law is expected to cover stablecoin issuance rules, licensing for virtual asset service providers (VASPs), disclosure obligations, internal controls, and system resilience. It also addresses spot crypto exchange-traded funds and cross-border virtual asset services. The Bank of Korea has championed a bank-led model for won-denominated stablecoins, citing payment, monetary policy, and financial stability concerns. The FSC simultaneously works on tokenized government bonds and CBDC pilots. Separately, the amended Foreign Exchange Transactions Act, effective in December, requires cross-border virtual asset transfer companies to register with the Ministry of Economy and Finance and report through the Bank of Korea's system. VASP licensing remains under the Financial Intelligence Unit, making the FSC a central player in both the existing compliance regime and the upcoming framework. The acceleration signals a desire to finalize the legal structure before the tax takes effect, aiming to provide regulatory clarity for businesses and investors alike. The FSC's accelerated pace reflects a broader push to align with global standards, including the Crypto-Asset Reporting Framework (CARF) adopted by the OECD.

Compromise Seen Ahead of 2027 Tax Start

The parallel urgency of the tax delay proposals and the framework act acceleration reflects South Korea's struggle to sync fiscal and market regulation. The National Assembly Budget Office's research serves as a primary-source warning: the current reporting architecture cannot effectively capture decentralized and overseas income, and it recommends a comprehensive overhaul before any 2027 enforcement. The official text of the Digital Asset Framework Act, not yet submitted, will determine whether stablecoin and VASP rules are in place before the tax deadline. As of today, without an amendment, the 20% tax on crypto gains applies from January 1, 2027, while the framework act's fate remains uncertain. COINOTAG sees the twin pressures likely to force a compromise, possibly linking any tax deferral to the completion of the framework act.