South Korean politicians agree to implement 2-year moratorium on crypto taxation
South Koreas Democratic Party agreed to delay the implementation of crypto taxation laws, signaling a temporary truce in the heated debate over digital asset regulation in the country, the Korean Herald reported on Dec. 2.
Democratic Party floor leader Rep. Park Chan-dae announced the agreement to postpone the taxation of crypto profits by two years. Park said during a press conference:
We have decided to agree to a two-year moratorium on the implementation of the cryptocurrency taxation proposed by the government and ruling party.
As of 2024, approximately 20% of South Koreas population nearly 10 million people engaged in crypto trading or investment. However, despite this high level of adoption, the country has adopted a cautious stance toward the industry.
The nations average daily crypto trading volume is estimated at 11.3 trillion won ($8.4 billion), often exceeding that of its stock exchange, the Korea Composite Stock Price Index (KOSPI).
Political agreement
The law imposes a tax on digital asset income and was initially set to take effect in January. The delay aligns closely with a government proposal, though the ruling People Power Party sought a three-year moratorium.
Parks opposition party has agreed to a short two-year delay but vowed to block new tax cuts for inheritances and gifts, which it claims disproportionately benefit the wealthy.
The agreement marks a shift in the Democratic Partys position. The party previously advocated raising the threshold for crypto-related tax deductions from 2.5 million won ($1,790) to 50 million won ($35,800) rather than delaying the law altogether.
Despite the concession on crypto taxation, Park emphasized his partys opposition to proposed reforms to inheritance and gift taxes. The government and ruling party plan to lower the top inheritance tax rate from 50% to 40% and dramatically increase the deduction threshold for assets passed from parents to children.
Debate around fiscal policy
The tax debates come amid broader discussions on South Koreas fiscal policies.
Last month, Democratic Party leader Rep. Lee Jae-Myung reversed course on a proposed tax on financial investment income, opting instead to support its repeal. The move was aimed at revitalizing the countrys lagging stock market and appeasing millions of investors.
Lee said:
I could not ignore the voices of 15 million financial stock investors who might be affected by structural vulnerability.
The crypto tax delay provides temporary relief to digital asset traders but raises questions about the governments ability to balance competing fiscal priorities.
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Text source: CryptoSlate
