South Korea faces a new wave of regulatory uncertainty as the long-planned tax on cryptocurrency gains —scheduled for 2027— may be pushed back once again, potentially to 2028. The repeated delays deepen investor mistrust and complicate corporate planning at a moment when regulatory clarity is essential for market development.
A fourth postponement is now on the table
The 2020 Income Tax Act established a 22% tax on annual crypto gains above 2.5 million KRW (≈ $1,705), but implementation has already moved from 2022 → 2023 → 2025 → 2027, and now a fourth delay to 2028 is increasingly likely. Each rollback reflects a mix of political pressure and persistent technical roadblocks that have prevented full rollout.
On the political front, the People Power Party (PPP) has repeatedly argued that delays reduce the risk of traders moving abroad and give the domestic industry more time to grow. Meanwhile, the Democratic Party of Korea (DPK) initially sought to raise the tax exemption to 50 million KRW (≈ $36,000) to protect smaller investors. Researcher Kim Kab-lae described the pattern as “unprecedented among major economies.”
Technically, authorities struggle to define and track taxable events. Airdrops, staking, mining, lending and forks remain difficult to classify, and regulators admit that while large transactions can be traced, small retail movements remain out of reach. South Korea has signed the OECD’s Crypto-Asset Reporting Framework (CARF), but domestic infrastructure is not ready to implement it by 2027, widening the gap between global standards and local capabilities.
Despite fiscal delays, regulators are intensifying enforcement and AML efforts. Over the last four years, the National Tax Service seized more than 146 billion KRW in crypto from delinquent taxpayers. Local governments have acted similarly: Cheongju seized assets from 203 residents, Gangnam confiscated 340 million KRW, and the KoFIU prepares sanctions against major exchanges like Upbit, Bithumb, Coinone, Korbit and GOPAX.
Regulatory uncertainty has triggered significant capital flight, with 78.9 trillion KRW moving from domestic exchanges to foreign platforms or private wallets. The user base remains large —10.77 million verified users in H1 2025— but unpredictability is eroding institutional liquidity planning. Meanwhile, the government lifted its 2025 ban on crypto firms receiving “venture company” status, restoring access to tax incentives and grants, a supportive gesture that contrasts with persistent tax delays.
South Korea now stands in a contradictory middle ground: it promotes and polices the crypto sector aggressively, yet postpones its full taxation, leaving the industry suspended between opportunity and ambiguity.