South Korea to Tax Crypto Income from Private Wallets and Foreign Exchanges

South Korea is set to introduce a new crypto tax regime from January 2027 onwards. Under this system, income earned from cryptocurrencies stored in private wallets and foreign exchanges will be subject to taxation.

The Ministry of Economy and Finance and the National Tax Service (NTS) have confirmed that taxable income generated through individual wallets and foreign exchanges will not exempt based on location or storage method. This means that even self-custody cryptocurrency holders will need to declare their tax obligations related to transfers and lending.

According to NTS, individuals who hold cryptocurrencies in private wallets can generate multiple addresses without intermediaries, making it challenging for the authorities to monitor these transactions. To address this issue, NTS is developing transaction tracking and analysis systems.

The new crypto tax system will classify income from digital assets as 'other income' with an annual deduction of 2.5 million won. Any income exceeding this amount will be taxed at a national rate of 20% and an additional local income tax of up to 22%. The government is also working on ways to deal with self-custodied cryptocurrencies when investigating crimes.