More than nine in 10 digital asset industry officials and experts in South Korea want the country’s planned taxation of virtual assets postponed, according to a survey released ahead of the levy’s scheduled start next year. They cited difficulty in obtaining transaction records from overseas exchanges and private wallets, as well as unclear tax standards for newer transaction types such as staking and airdrops. Industry officials warn that pushing ahead with taxation without adequate groundwork could accelerate an exodus of domestic investors to overseas exchanges.
In an urgent survey conducted by The Seoul Economic Daily on the 18th of 30 people — including officials at major domestic crypto exchanges, custody providers and blockchain infrastructure firms, along with academic and legal experts — 93.3%, or 28 respondents, said the tax should be delayed. Of those, 70% said they strongly agreed and 23.3% said they agreed. Only one respondent opposed a delay.
Those backing a delay said at least two more years are needed to put the system in place. Among the 28 respondents who supported postponement, 96.4% said taxation would be appropriate from 2029 or later. The largest share, 39.3%, chose 2029, followed by 35.7% for 2030 and 21.4% for 2031 or later. They argued that Korea needs time to build a framework for obtaining overseas transaction data, taking into account factors such as the U.S. timeline for joining the Crypto-Asset Reporting Framework (CARF).
At the heart of the case for delay is concern over fairness. Virtual assets move through a complex chain of transactions, passing between domestic and overseas exchanges, moving into private wallets or being swapped for other tokens. If tax authorities cannot accurately determine acquisition prices and actual gains or losses in that process, the tax burden could vary from one taxpayer to another, respondents said. Asked whether the National Tax Service can accurately identify and tax transactions on overseas exchanges and private wallets, 86.7% answered negatively. Only 6.7% gave a positive assessment.
Respondents were also skeptical that investors can calculate and report their own taxes. Ninety percent judged that investors are inadequately prepared to file. Individuals would have to compile transaction records scattered across domestic and overseas platforms and private wallets, then verify prices and gains or losses at each purchase and sale — an excessive burden on individuals, they said.
Calls to clarify the tax standards themselves were especially prominent. Asked to select multiple areas needing improvement before the tax takes effect, 80% of respondents pointed to setting tax standards for specific transaction types such as staking, airdrops and decentralized finance (DeFi). Another 76.7% said rules for calculating acquisition prices and gains or losses need to be overhauled.
Staking involves putting held tokens to work in operating and validating a blockchain network in return for rewards. The problem is that it remains unclear whether tokens received as rewards should be recognized as income immediately upon receipt or taxed when later disposed of. For airdrops, in which tokens are distributed to users free of charge, respondents said the point at which income is recognized and the method for valuing the assets also need to be clarified.
Allowing losses to be carried forward was another key issue, raised by 66.7% of respondents. Under current rules, losses from virtual asset investments cannot be deducted from gains in the following tax year. That means an investor who suffered heavy losses one year could still owe tax on gains the next year, even while only partly recovering earlier losses. Demand for better filing infrastructure was also high: 63.3% cited building a simplified filing system as an urgent task, and 56.7% pointed to establishing a framework for obtaining transaction data from overseas exchanges and private wallets.
Industry officials worry that taxing virtual assets without closing these gaps could speed up the departure of domestic investors to overseas exchanges. Of those surveyed, 86.7% expected trading volume at major domestic exchanges to fall after the tax takes effect. More than half, 56.7%, projected a drop of 30% or more, while 26.7% forecast a decline of 10% to 30%. A digital asset company chief executive identified as A said an exodus to overseas exchanges is all but certain.
Respondents also called for raising the basic deduction. Under the current income tax law, 2.5 million won is deducted from annual income earned through the transfer or lending of virtual assets, with the remainder taxed at 22%, including local income tax. Seventy percent of those surveyed said the basic deduction should be raised to 50 million won or more, arguing for consistency with the 50 million won deduction once planned for domestic listed stocks under the proposed financial investment income tax.
Some experts said the government’s own lack of preparation should be examined before granting another delay. Virtual asset taxation was originally set to take effect in 2022 but has been postponed three times, they noted, while key issues such as tax standards by transaction type and the calculation of acquisition prices remain unresolved. A professor in the digital asset field, identified as B, said there should be reflection and accountability for the fact that existing policy has not improved at all during the repeated delays. A tax expert identified as Professor C stressed that simply pushing back the start date is not enough, saying the government should specify which agencies are responsible for each task, along with deadlines and verification standards, during any grace period.
The government plans to gather views from the field. Kwon Dae-young, first vice minister of the Ministry of Finance and Economy, and Yoo Young-joon, director general for digital finance policy at the Financial Services Commission, will meet on the 20th with the heads of Korea’s five largest crypto exchanges to hear about preparations for the tax and the industry’s calls for changes to the system. In the National Assembly, debate on bills to delay the tax is expected to gain momentum next month at the tax subcommittee of the Finance and Economic Planning Committee.