South Korea Delays Crypto Tax for Two Years

The decision follows heated debates on how to regulate digital assets as more South Koreans trade or invest in crypto.

The delay is a big win for crypto traders, but it also highlights the country’s cautious approach to the booming industry. Let’s see more about this important news for crypto tax.

What’s Happening with Crypto Tax in South Korea?

The government had planned to tax crypto profits starting in January 2024. The new law would have taxed income from digital assets like Bitcoin and Ethereum. However, after discussions, the Democratic Party agreed to postpone the law’s start for two years.

Rep. Park Chan-dae, leader of the Democratic Party in South Korea, announced the deal, saying, “We have decided to agree to a two-year moratorium on the implementation of the cryptocurrency taxation.” This delay is important because it comes at a time when nearly 10 million South Koreans—about 20% of the population—are involved in crypto trading or investing.

CRYPTO TAX PUSHED TO 2027—KOREA PLAYS POLITICAL PING-PONG

First, South Korea’s Democratic Party called the tax delay a political stunt.

Now? They’re all for it.

Crypto investors just got another two years to cash out before the 20% tax hits, but don’t get too comfy.

This… pic.twitter.com/B0u1pBODIW

— Crypto Town Hall (@Crypto_TownHall) December 1, 2024

Why the Delay?

South Korea has become a major player in the global crypto market, with daily trading volumes often surpassing that of the country’s stock exchange. The delay in crypto tax implementation is seen as a way to buy more time to understand the market better before rushing into taxation.

The country’s daily crypto trading volume is estimated at $18 billion. This shows just how much interest South Koreans have in digital assets. However, even with such high involvement in crypto, the government and lawmakers are taking their time with regulations.

🇰🇷 According to 10x Research, retail crypto trading volume in South Korea surpassed $18 billion yesterday, 22% higher than the local stock market.

This marks the second-highest trading volume of 2024. Investors showed strong interest in XRP, DOGE, XLM, ENS, HBAR, and SHIBA.… pic.twitter.com/cPPk03WLTV

— glitsday (@glitsday) December 3, 2024

The Politics Behind the Delay

While the Democratic Party agreed to the two-year delay, they’re not backing down on other issues. They’ve promised to block proposed cuts to inheritance and gift taxes, which they argue mostly benefit the wealthy. This marks a shift in the party’s earlier stance, where they suggested raising the crypto tax threshold instead of delaying the tax altogether.

The ruling People Power Party had pushed for a three-year delay, but the two parties met in the middle. The delay shows how South Korea is trying to balance innovation and caution in the world of cryptocurrency.

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