Government Gathers Major Cryptocurrency Exchanges Ahead of Tax Implementation

The government is convening representatives from five major cryptocurrency exchanges to gather industry feedback as it prepares to implement cryptocurrency taxation in January 2027. With the industry calling for a delay due to insufficient tax infrastructure, interest is growing in the possibility of a fourth postponement following the introduction of a tax bill by members of the ruling party.

According to financial authorities and the cryptocurrency industry on October 18, the government plans to hold a meeting on October 20 with representatives from Upbit, Bithumb, Coinone, Digitalex, and Gopax, as well as executives from the Digital Asset Exchange Joint Council (DAXA). Key officials, including Kwon Dae-young, the first vice minister of the Ministry of Economy and Finance, and Yoo Young-jun, the director of digital finance policy at the Financial Services Commission, are expected to attend.

Cryptocurrency taxation was introduced through an amendment to the Income Tax Act in 2020 but has been postponed three times due to challenges in securing tax data and determining acquisition costs. It is now set to take effect on January 1, 2027, imposing a 22% tax rate (including local income tax) on annual cryptocurrency transfer and lending income exceeding 2.5 million won after a deduction.

The industry continues to demand an additional delay, arguing that the tax criteria and infrastructure are still inadequate. There are particular concerns regarding the unclear tax standards for various transaction types, such as staking and airdrops. Stakeholders assert that detailed tax criteria must consider the economic realities, as income generation structures vary by transaction method.

Another issue raised is the difficulty for tax authorities to accurately track transaction histories through overseas exchanges and personal wallets. Unlike domestic exchanges, overseas platforms are not obligated to report transaction histories to South Korean tax authorities, placing the burden on investors to prove their transaction details and acquisition costs.

As a result, there are fears that domestic exchange usage may decline and trading could shift overseas after the tax implementation. A recent survey conducted by Tiger Research among 2,423 domestic cryptocurrency investors revealed that 73.1% of respondents indicated they might reduce their use of domestic exchanges following the tax's introduction.

Within the ruling party, there are conflicting views on whether to delay the cryptocurrency tax or proceed as planned. On October 16, Democratic Party lawmaker Park Min-kyu introduced a bill that would effectively postpone the tax implementation to 2029. Conversely, there are strong arguments for proceeding with the scheduled implementation, given that it has already been delayed three times. A ruling party official noted, "If we delay again, it’s uncertain when it could be implemented, considering the election schedule."

The government maintains that it is preparing for the tax to proceed as planned. Lim Kwang-hyun, the head of the National Tax Service, stated during a parliamentary audit on October 13 that preparations are underway to announce guidelines on cryptocurrency taxation by November.