South Korea Crypto Tax Set to Slash Domestic Exchange Trading by 30%

A South Korean government plan to tax cryptocurrency income is expected to cut trading volume at domestic exchanges by about 30% next year, according to research firm Tiger Research. The forecast suggests that annual trading volume will fall from around 859.8 trillion won ($636.4 billion) this year to approximately 601.9 trillion won ($445.6 billion) in 2027.

The tax rate of 22% will apply to net profits exceeding 2.5 million won ($1,850) from virtual-asset transfer and lending income starting from January 1, 2027. A survey conducted by Tiger Research found that over 70% of respondents said they may reduce their use of domestic exchanges after the tax is introduced.

Some investors plan to shift their trading activities to overseas exchanges or decentralized exchanges (DEXs), while others may reduce the size of their investments or stop investing altogether. The decline in trading volume and exchange revenue could be significant, with a potential loss of about 258 trillion won ($191.1 billion) in trading volume at South Korea's three largest exchanges: Upbit, Bithumb, and Coinone.

Exchange revenue is forecast to fall by around 29.5% next year, from approximately 1.033 trillion won ($765.7 million) this year to about 728.2 billion won ($539.2 million). Investors with at least 100 million won ($74,100) in principal invested are more likely to reduce their use of domestic exchanges and switch to overseas platforms or private wallets.