South Korea Advances Crypto Regulation Amid Tax Dispute

The South Korean government is moving forward with plans to draft a consolidated Digital Asset Basic Act. This bill aims to cover stablecoins and digital asset exchanges, among other key elements of its second-stage digital currency legislation.

Ten separate bills related to digital assets are still pending in Parliament, but disagreements have prevented the country from advancing its regulatory framework for cryptocurrencies.

The Financial Services Commission (FSC) has yet to announce when or how the consolidated bill will be introduced. Ongoing debates exist regarding whether banks should own won-denominated stablecoin issuers and whether ownership restrictions should be placed on major digital currency exchanges.

Meanwhile, the National Assembly's Finance and Economic Planning Committee is scheduled to review a bill to abolish South Korea's 22% digital currency income tax. Starting January 1, 2027, digital asset gains exceeding KRW 2.5 million ($1,700) annually will be subject to this separate tax rate.

The opposition argues that taxing digital currency while ordinary stock investors remain exempt is unfair. The South Korean government and the ruling Democratic Party support implementing the tax.