The request for a deferral of cryptocurrency taxation has gained substantial sympathy among the public, as evidenced by the “Cryptocurrency Taxation Deferral Petition” surpassing 43,000 signatures on the national petition board. If the petition reaches 50,000 signatures by the 20th, it will be reviewed by the National Assembly. The petitioner has called for the deferral of cryptocurrency taxation, which the government had postponed for 2 years, to be finalized, as the National Assembly has not yet reached an agreement. Furthermore, they have requested that the government consider taxation after ensuring transparency improvements for the Digital Asset Exchange Alliance (DAXA) and establishing investor protection mechanisms, similar to the deferral of financial investment income tax.
This petition resonates with cryptocurrency investors. Given the market’s instability and investor losses due to events such as the Luna crisis and the bankruptcy of foreign cryptocurrency exchanges, there is a growing concern that taxing cryptocurrency investments could further shrink the market. Consequently, cryptocurrency taxation deferral has emerged as a key issue in politics. With the April 10th general election approaching, both ruling and opposition parties have announced pledges to win over cryptocurrency investors.
The People Power Party has announced a pledge to further defer cryptocurrency taxation for an additional 2 years. This decision stems from the difficulty in securing the rationality of taxation without the legalization of cryptocurrency. On the other hand, the Democratic Party has proposed expanding the tax deduction limit for cryptocurrency from 2.5 million won to 50 million won as a measure to alleviate tax burdens. The differing approaches of the ruling and opposition parties reflect the diverse opinions and demands of the public on cryptocurrency taxation.
The cryptocurrency taxation system, introduced through the amendment of the Income Tax Act in 2020, required the reporting and payment of income earned from the transfer or lending of virtual assets as miscellaneous income. Originally scheduled to commence in 2022, the implementation of this taxation system was postponed twice to 2025, citing the need for time to establish a cryptocurrency taxation infrastructure and an investor protection system. However, as the implementation date approaches, calls for further postponement are growing, and this petition is a manifestation of that sentiment.
