South Korea’s government has confirmed that a 22% tax on crypto income will take effect on Jan. 1, 2027, even as trading volume on the country’s five largest exchanges fell 54.6% in the first half of the year.
Tax schedule stays in place
Under South Korea’s Income Tax Act, income from transferring or lending virtual assets is classified as “other income,” separate from wages and business income.
Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol told the National Assembly’s Strategy and Finance Committee on July 29 that the government would stick to the existing timetable and was not signaling another delay.
The rules call for a 20% national tax on annual profits above 2.5 million won, roughly $1,740. After local tax is added, the effective rate reaches 22%. Investors whose annual gains stay below that threshold will not be taxed.
The first filing is expected in May 2028 and will cover income earned throughout 2027. The measure was approved in 2020 and was first set to begin in January 2022. It was later postponed to 2025, and then pushed back again to 2027.
Opposition targets loss treatment
Criticism has focused on how the tax is structured. Kim Sang-hoon, a lawmaker from the opposition People Power Party, said the current design does not let investors carry losses forward into future tax years to offset later gains.
He warned that such a framework could push trading activity overseas. In his view, capital could move to offshore exchanges, decentralized platforms or over-the-counter peer-to-peer markets, reducing both domestic trading volume and the visibility of taxable activity inside South Korea.
Koo acknowledged those concerns but did not indicate any willingness to relax the system. He said that if crypto were to be moved into a capital gains tax framework, the government would also have to review the broader tax design for the entire financial market, which would widen the scope of the overhaul.
Separately, the opposition submitted a bill in March that would remove crypto income entirely from the Income Tax Act. That proposal is now under committee review, and the possibility of repeal or another delay has not been ruled out.
Exchange turnover keeps falling
Combined spot trading volume at Upbit, Bithumb, Coinone, Korbit and Gopax came to about $366.58 billion in the first half of this year, down 54.6% from the same period a year earlier.
The decline continued into July, when monthly trading volume fell another 16.9% from June.
The report said the slowdown reflects not only a weak crypto market but also a shift in retail money toward equities.
Market share is concentrating at the top
As overall turnover contracts, the structure of South Korea’s exchange market is also changing. Upbit’s concentration trend is continuing, while smaller platforms are facing more direct pressure.
According to the report, Coinone, Korbit and Gopax are all considering partnerships with securities firms, expanding institutional services, and even organizational restructuring as they look for ways to stay competitive in a market with lower trading activity.