South Korea Delays Crypto Tax to 2029 in Fourth Postponement
Key Takeaways
- •South Korea has deferred its cryptocurrency gains tax to 2029, the fourth postponement since the levy was legislated in 2020, and Finance Minister Lee Hyoung-il admitted the repeated delays have undermined the government's credibility.
- •Under the current law, profits from selling or lending digital assets above an annual allowance of 2.5 million won, roughly $1,869, would be taxed at a combined 22% rate of 20% national tax plus a local surcharge.
- •The government justified the 2029 start date by aligning with South Korea's planned participation that year in the OECD's Crypto-Asset Reporting Framework, which enables automatic exchange of crypto tax information with the United States.
- •During the extended period, authorities plan to introduce a three-year loss carryforward letting past trading losses offset future gains, a provision currently absent from Korean rules and from those of the United States, the United Kingdom, and Japan.
- •The opposition People Power Party accused the government of delaying the tax to court younger investors before the April 2028 general election, while a Tiger Research and Chainalysis survey found 73.7% of 2,423 Korean crypto holders opposed the tax under current rules.
South Korea will postpone taxation of cryptocurrency gains by two years, moving the start date to 2029 in the country's fourth delay of a levy that has never taken effect. Finance Minister Lee Hyoung-il announced the decision and acknowledged that the repeated postponements have damaged the government's credibility.
How the fourth delay came about
Speaking at a briefing at the Government Complex in Seoul, Lee said his ministry would work with the National Assembly to defer the proposed tax on cryptocurrency profits. The announcement landed one day after Democratic Party of Korea Chairman Kim Min-seok formally requested another postponement, and the government reportedly agreed within 24 hours.
The decision marks a shift from Lee's September confirmation hearing, where he said it was "desirable to implement taxation from 2027 as scheduled." The government held to that timeline through mid-October. Later in the month, First Vice Finance Minister Kwon Dae-young met the country's five largest exchanges on October 20 to check whether they were ready for the tax and to hear their concerns. The ruling party held its own session with exchange representatives on October 30.
Critics say the repeated delays weaken the principle that income should be taxed and hurt trust in government deadlines — a problem that Lee directly acknowledged.
How the 2029 tax would work
Under the current law, profits from selling or lending digital assets are classified as miscellaneous income. Gains above an annual allowance of 2.5 million won (about $1,869) would be subject to a local income surcharge and a 20% national rate, for a combined 22%.
The tax law was written in 2020 and made into a bill in December of that year, but it has never taken effect. The original 2022 start date was pushed to 2023, then to 2025, then to 2027.
The government says it is postponing the tax to 2029 because South Korea is set to begin sharing cryptocurrency information with the United States that year under the OECD's Crypto-Asset Reporting Framework, a standard for automatic exchange of crypto-asset tax information between participating jurisdictions. The alignment is meant to coincide with the moment Korean authorities gain cross-border visibility into holdings reported by overseas service providers.
Lee also mentioned the upcoming Digital Asset Basic Act, which is expected to change the definitions of digital assets and the rules for companies that offer crypto services.
During the extra two years, the government plans to let investors carry their losses forward for three years, meaning past trading losses could be offset against gains in later years. The current rules do not allow this, a policy many have criticized; the United States, the United Kingdom and Japan do not have the same restriction.
A group of government and private-sector members will work out the details and present reform proposals in the first half of 2027. Legislative changes are to be submitted the same year, so the exact parameters investors would face in 2029 remain to be settled through that process.
Political and industry reaction
The opposition People Power Party called the postponement political. Party spokesman Mun Jong-hyeong accused the government of courting younger cryptocurrency investors ahead of the general election scheduled for April 2028. Under the 2027 start date, the first filings would have come due in May 2028, weeks after that vote. Under the revised schedule, the levy would not take effect until after the election.
Industry groups, by contrast, welcomed the delay. They pointed out that it is difficult to prove what investors paid for assets moved through overseas exchanges or private wallets — the same visibility gap the CARF alignment is intended to address beginning in 2029.
Many investors feel the same way. A survey by Tiger Research with Chainalysis found that 73.7% of 2,423 Korean cryptocurrency holders opposed the tax under the current rules. However, 51.5% of those opponents said they would accept it if the gaps were fixed.
Two petitions were submitted to Parliament — one to scrap the tax and one for a two-year delay — each surpassing 50,000 signatures.
