South Korea's cryptocurrency tax implementation faces mounting political resistance as independent lawmaker Han Dong hoon calls for another two-year delay before the January 1, 2027 start date. According to News1, Han raised concerns in a September 15 Facebook post, questioning whether taxation should begin when crypto can move legally from domestic exchanges to foreign platforms and private wallets. The 22% tax is scheduled to take effect on January 1, 2027, with an annual basic deduction of ₹2.5 crore (2.5 million won). Under current rules, qualifying income from transferring or lending virtual assets will become taxable, with annual gains above the deduction facing a 20% national tax plus 2% local income tax, bringing the combined rate to 22%. Han disputed the government's ability to track overseas trading activity, claiming the Crypto-Asset Reporting Framework (CARF) could cover less than 20% of cryptocurrency trading.
South Korea's Financial Services Commission is reviewing the introduction of formal crypto market-making systems after JPYC, a stablecoin designed to track the Japanese yen, surged to 37.6 won on Upbit within an hour of its September 17 debut. The token began trading at 12 Korean won per token and climbed to more than four times its estimated yen-linked market value of 8.8 won. As reported by crypto.news, the spike was attributed to limited liquidity on Upbit rather than any change in JPYC's underlying yen backing, demonstrating how thin order books can push stablecoins far from their intended currency tracking. The incident has forced South Korea's top financial regulator to confront questions about crypto market stability that it has previously avoided.
Yoo Young-joon, director of digital finance policy at the FSC, announced the agency would examine the need for market-making activities to increase efficiency and stability of the digital asset landscape. According to crypto.news, Yoo acknowledged that criticism has emerged over user losses tied to the post-listing price surge, with demands for discipline in this area expanding. The regulatory challenge stems from South Korea's Virtual Asset User Protection Act, which currently contains no exemption for market-making from its market-manipulation provisions, effectively blocking firms from providing continuous two-sided liquidity. A 2024 peer-reviewed paper in Seoul Law Review by KB Securities researcher Lee Min Jung had previously suggested a carve-out could be considered once the market matured.
South Korean authorities have been building systems to address the enforcement problems raised by lawmakers. The government expects CARF to provide overseas virtual asset transaction information from 48 participating jurisdictions, including Japan, Germany and France, as international information exchange begins. According to News1, the National Tax Service has completed a tax source management system and is developing an integrated analysis system for virtual asset taxation. Private wallets present additional challenges because blockchain addresses do not automatically identify the person controlling them, but the NTS has acknowledged practical limits in identifying every unreported transaction. Finance Minister nominee Lee Hyoung il said during a September 15 National Assembly hearing that 85% of crypto investors held less than ₹4.2 crore (5 million won) in assets, arguing that most investors would be minimally affected by the tax.
Political opposition to the 2027 timetable has intensified with a National Assembly petition seeking a two-year delay crossing the 50,000 signature threshold required for legislative review in September. As reported by News1, this represents the fourth postponement attempt for the cryptocurrency tax, which was initially planned for 2022 before being delayed to 2023, then 2025, and finally 2027. People Power Party lawmaker Jeong Seong guk has proposed moving implementation from 2027 to January 1, 2030, while another opposition proposal seeks to remove cryptocurrency income taxation from the Income Tax Act entirely. South Korea's Financial Services Commission expects its second-stage digital asset legislation to reach a parliamentary review in November, with 10 digital asset and stablecoin proposals currently pending. The tax dates back to amendments approved in 2020, with investors earning taxable crypto income during 2027 expected to file their first returns in May 2028.
