South Korea Considers Five-Year Loss Carryforward for Crypto Investors

South Korean lawmakers are revisiting the plan to tax cryptocurrency investments, this time suggesting that investors be allowed to carry forward losses for at least five years before taxation. Rep. Min Byung-deok of the Democratic Party of Korea made this proposal in a Facebook post on September 22, stating that the current system lacks a loss carryforward provision. According to Min, if an investor records a 10 million won loss on virtual-asset investments in the first year and then posts a 10 million won profit the following year, they would still have to pay 1.65 million won in tax in the second year.

Min's proposal is based on the example of major countries such as the U.S. and the U.K., which allow investment losses to be carried forward and deducted in future tax years. He also pointed out that there is a lack of clarity over how acquisition costs should be calculated, with relevant standards left to presidential decree. Min emphasized that taxation must come first, but the government must establish a foundation that allows taxes to be collected fairly.

The proposal suggests delaying virtual-asset taxation until after passage of the Digital Asset Basic Act, which would establish the legal status of staking, lending, airdrops, and hard forks, as well as investor protections and service provider responsibilities. Min also suggested disclosing in advance the revenue effects and administrative costs of crypto taxation.