South Korea Delays Crypto Tax by Two Years, Cites Need for Refinement

South Korea has delayed the implementation of its crypto tax policy by two years, citing the need for further institutional refinement. 

Park Chan-dae, the floor leader of the Democratic Party of Korea, announced this decision during a press conference at the National Assembly. 

The postponement follows extensive discussions, with Park emphasizing the need for an overhaul in the regulation of virtual assets. The delay comes amidst heightened political tensions and market volatility.

Postponement of Virtual Asset Taxation

The Democratic Party of Korea confirmed that the virtual asset tax, previously scheduled for implementation, would now be deferred. The party justified the decision by stating that the current regulatory framework required additional improvements to ensure systematic taxation. 

This announcement coincided with debates over several supplementary budget bills. Of the 13 bills proposed by the government, eight were marked for immediate processing during the upcoming plenary session, while five others remained under further deliberation. Notably, the inheritance and gift tax bill faced rejection, with criticism focusing on its provision to lower the top inheritance tax rate.

The party also maintained its opposition to the government’s separate taxation of dividend income. Park described it as disproportionately favoring the wealthy. Discussions between ruling and opposition parties are expected to continue, with the National Assembly Speaker facilitating potential last-minute negotiations.

Fluctuations Amid Political Developments

It is important to recall that political developments in South Korea have had a significant impact on the crypto market. Early this month, following the announcement of martial law, prices of cryptocurrencies traded against the Korean won on the Upbit exchange experienced glitches. 

Bitcoin briefly plummeted to $66,000 (88,266,000 won) before recovering, although it continued to trade at a discount compared to other exchanges. Similarly, XRP’s value dropped to $1.16 (1,623 won) before rebounding above $2.4 (3,412 won). Meanwhile, it traded much higher on global markets.

These crypto fluctuations occurred in tandem with disruptions in South Korea’s broader financial markets, including stocks and bonds. Notably, President Yoon Suk Yeol’s emergency martial law declaration marked the first use of martial law since the 1980s and added to the growing uncertainty.