South Korea moves closer to comprehensive crypto rules

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Korea advances crypto bill

Highlights

South Korea may combine 10 crypto bills into one framework.
Stablecoin ownership rules remain under negotiation.
Crypto income above 2.5 million won faces a 22% tax.
The tax is scheduled to begin on Jan. 1, 2027.

The Financial Services Commission plans to work with the ruling Democratic Party on a consolidated Digital Asset Basic Act, according to information presented ahead of a July 29 policy briefing. The proposal could merge 10 pending bills into a single government-backed framework covering stablecoins, trading platforms, disclosure rules, internal controls, and system resilience, Crypto.News reports.

A broader regulatory framework

The planned law would go beyond the current Virtual Asset User Protection Act, which focuses mainly on custody, unfair trading, and consumer safeguards. The next stage would regulate issuers, service providers, and wider market structure, including standards for exchange access and operational security.

Several major issues remain unresolved. One is whether won-backed stablecoin issuers should be controlled by bank-led consortiums holding at least 50% plus one share. The Bank of Korea favors a leading role for banks because of potential risks to monetary and financial stability, while industry groups and some lawmakers support licensed non-bank issuers subject to reserve and compliance requirements.

Lawmakers must also decide whether ownership limits should apply to major crypto exchanges. Discussions have included exchange governance, cybersecurity standards, internal controls, and compensation rules, but the Financial Services Commission has not completed the bill or announced a filing date.

Crypto tax fight moves closer to deadline

Under current law, qualifying annual crypto income above 2.5 million won will face a 20% national tax and a 2% local tax beginning Jan. 1, 2027. The measure has already been postponed three times since its original 2022 start date.

The opposition People Power Party has introduced an amendment seeking to remove the tax provisions for income from transferring or lending digital assets. Supporters argue that taxing retail crypto gains while many individual stock gains remain exempt creates unequal treatment. A public repeal petition backed by more than 50,000 people is also awaiting committee review.

The government and ruling party continue to support implementation, while the National Tax Service is preparing guidance and has created a dedicated digital asset unit. Unless lawmakers approve repeal or another delay, the 22% rate will take effect as scheduled.

A defining year for Korean crypto policy

The outcome will determine whether South Korea moves toward a bank-centered stablecoin model, a more open licensing system, or a compromise between the two. It will also decide whether millions of retail investors face a new tax regime in 2027.

For exchanges and issuers, clearer rules could reduce legal uncertainty but raise compliance costs. For investors, the immediate question is simpler: whether the planned 22% tax survives the coming legislative battle. No verified crypto price movement has been directly linked to either proposal.

As we previously reported, South Korea's crypto trading volumes fall nearly 90% in one year.

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