South Korea has announced a further delay in implementing the cryptocurrency tax until January 2028. Originally, the government planned to introduce a 20% tax on cryptocurrency profits starting January 2022. However, due to persistent pressure from investors and market volatility, the deadline has been pushed back multiple times (EconoTimes) (FinanceFeeds).
Related: South Korea Aims to Implement Cryptocurrency Tax by 2025
Reasons for the Delay
The primary reason for the postponement is the concern that imposing the tax under current conditions could lead to a mass exodus of investors from the market. The government indicated that with the current negative market sentiment, many investors might cease their activities, further decreasing trading volumes and adversely affecting the economy (EconoTimes) (FinanceFeeds).
Political and Economic Factors
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President Yoon Suk-yeol and the ruling People Power Party have actively supported the tax delay, fulfilling their campaign promises to attract the support of young voters, particularly millennials and Gen Z, who are heavily involved in cryptocurrency investments (FinanceFeeds). Additionally, there is a pressing need for further legislative regulation and the establishment of a transparent legal framework for cryptocurrencies (FinanceFeeds).
State of the Cryptocurrency Market in South Korea
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South Korea is one of the largest cryptocurrency markets in the world. By 2024, the number of cryptocurrency investors in the country reached 6.5 million, accounting for about 12.5% of the population (FinanceFeeds). This highlights the importance of creating stable and predictable conditions for crypto investors, which also influenced the decision to delay the tax.
The introduction of a cryptocurrency tax in South Korea remains a contentious issue, requiring a careful approach and further discussions at the government level.