South Korea’s main opposition Democratic Party (DP) is pushing to implement a more relaxed cryptocurrency tax policy, raising the tax exemption threshold from 2.5 million won ($1,790) to 50 million won ($35,800) ahead of the January 2025 rollout, party sources confirmed on Thursday.
The original plan, delayed twice since its proposed start in January 2022, would impose taxes on annual virtual asset gains exceeding 2.5 million won. The DP’s revised proposal aims to mitigate financial burdens on younger investors, a demographic that has become increasingly significant in the cryptocurrency market.
Tax Threshold Change to Protect Young Investors
Rep. Jin Sungjoon of the DP affirmed that the party intends to proceed with the tax scheme as scheduled next year while advocating for the higher exemption threshold. “The new threshold reflects the need to protect the younger generation, who are the most active investors in virtual assets,” said a member of the National Assembly’s Strategy and Finance Committee.
The 50 million won figure, however, is not final, and further discussions may adjust the amount. “This threshold was initially aligned with the now-removed financial income tax scheme. Adjustments might be necessary depending on evolving circumstances,” the lawmaker added.
Ruling Party Advocates Two-Year Delay
The ruling People Power Party (PPP) has countered with a proposal to delay the tax policy’s implementation by another two years, citing concerns over market readiness and potential chaos.
PPP Chair Han Dong-hoon emphasized the importance of creating a fair and prepared taxation environment. “While income must be taxed, we must ensure that the system is implemented in a way that doesn’t disrupt the lives of over eight million crypto investors, most of whom are young people,” he said at a Supreme Council meeting.
An online petition supporting the delay has garnered over 59,000 signatures as of Thursday, reflecting growing public apprehension about the immediate adoption of the policy.
Broader Economic Context
The DP’s stance comes weeks after its chair, Lee Jae-myung, aligned with the PPP to scrap a financial investment income tax. The measure, which would have taxed capital gains exceeding 50 million won, was delayed for nearly four years before its abandonment. Lee justified the move as essential for revitalizing South Korea’s undervalued stock market.
Meanwhile, cryptocurrency markets continue to soar. Bitcoin surged past $96,000 following reports that President-elect Donald Trump’s social media company might acquire crypto trading platform Bakkt, signaling potentially favorable regulatory shifts under his administration.
The debate over South Korea’s crypto tax policy highlights broader questions about balancing innovation with regulation in the digital asset space, as lawmakers from both sides attempt to navigate public opinion and market volatility.
