South Korea's FSC to Draft Consolidated Digital Asset Basic Act as Opposition Pushes Crypto Tax Repeal
Key Takeaways
- •The FSC plans to introduce a consolidated Digital Asset Basic Act in cooperation with the ruling Democratic Party to unify ten pending cryptocurrency and stablecoin bills currently stalled in Parliament.
- •The proposed legislation would cover stablecoin issuance and circulation, exchange entry requirements, corporate disclosures, internal controls, and system resilience standards for digital asset businesses.
- •Key disagreements persist over whether won-denominated stablecoin issuers must be majority bank-owned and whether ownership limits should apply to major cryptocurrency exchanges.
- •An opposition bill introduced in March seeks to abolish South Korea's planned cryptocurrency income tax, which would impose a combined 22% rate on annual crypto income exceeding 2.5 million won starting January 1, 2027.
- •The government and ruling party support implementing the crypto tax, while the opposition People Power Party argues it is inequitable because most ordinary stock investors remain exempt from similar taxation.
South Korea's Financial Services Commission (FSC) plans to collaborate with the ruling Democratic Party on a consolidated Digital Asset Basic Act, aiming to provide lawmakers with a government-backed legislative framework for stablecoins and the broader cryptocurrency market following months of delays.
According to an Edaily report published Wednesday, the FSC informed the National Assembly ahead of a policy briefing that it intends to introduce a unified bill. The proposed legislation would address stablecoin issuance and circulation, digital asset business rules, exchange entry requirements, corporate disclosures, internal controls, and system-resilience standards.
A joint government-ruling party proposal could serve as a central framework for legislative negotiations. Currently, 10 separate digital asset and stablecoin bills are pending in Parliament, and disagreements among lawmakers have stalled progress on key elements of South Korea's second-stage cryptocurrency legislation. Bringing those provisions into one bill could give the Assembly a clearer starting point as it weighs rules that would affect issuers, exchanges, and market operators at the same time.
The FSC has not yet finalized the timing or method for introducing the consolidated bill. Key points of contention remain, including whether issuers of won-denominated stablecoins should be majority-owned by banks and whether ownership limits should be imposed on major cryptocurrency exchanges.
Opposition Crypto Tax Repeal Bill Advances
In a separate development, the National Assembly's Finance and Economic Planning Committee was scheduled on Wednesday to discuss an opposition bill that would abolish South Korea's cryptocurrency income tax before its scheduled implementation on January 1, 2027.
The Income Tax Act amendment, introduced on March 19 by People Power Party lawmaker Song Eon-seok, seeks to eliminate the provision taxing income derived from transferring or lending digital assets. According to Edaily, the bill is expected to be referred to the committee's tax subcommittee for detailed review.
A separate repeal petition backed by more than 50,000 signatories is also expected to go before a petitions subcommittee. However, neither subcommittee has been fully constituted, and no review dates have been established.
Under current law, starting January 1, 2027, income from transferring or lending cryptocurrencies exceeding 2.5 million won (approximately $1,700) per year will be subject to a 20% tax rate plus an additional 2% local income tax.
The government and the ruling Democratic Party support implementing the tax, while the opposition People Power Party contends that taxing crypto investors while most ordinary stock investors remain exempt is inequitable. On May 7, the Finance Ministry confirmed the tax would proceed after multiple delays.