Korea Introduces Tax Rules for Stablecoin Payments

Korea will introduce tax rules for stablecoin payments starting next year.

The government will treat gains from exchange-rate moves and price fluctuations in stablecoins, such as Tether (USDT), as taxable income. This means that buyers who use USDT to purchase goods or services will owe tax on any gains they make.

According to a senior government official, 'stablecoins are taxable when they are converted into won or exchanged for other cryptocurrencies.' The official added that 'tax is also levied on gains that arise when they are used for payments, including purchases of goods and services.'

The tax rules will apply from the beginning of next year. In addition to taxing gains from stablecoin conversions, the government will also count price gains from using USDT as a means of payment as taxable income.

Critics argue that separate tax rules are needed for stablecoins due to their unique characteristics. Hwang Suk-jin, a professor at Dongguk University's Graduate School of International Information Protection, said 'when stablecoins are used as a means of payment, they need to be treated differently from transactions made for investment purposes.'

The USDT premium on Upbit averaged 1.09% and peaked at 8.55% between June 19, 2024, and this month. On 599 out of the 814 days, or 73.6%, the domestic price was higher than overseas prices.