South Korea’s Crypto Community Concerned Over Impending 20% Tax on Crypto Gains

The looming 20% tax on crypto gains in South Korea has sparked concerns within the local cryptocurrency community, with fears that it could drive away investors and potentially disrupt the market. The Ministry of Economy and Finance’s plan to impose this tax, along with an additional 2% local income tax, has raised alarms among domestic exchanges and investors.

With the tax scheduled for implementation in 2025 after multiple delays, exchanges like Upbit, Bithumb, and Coinone are warning that trading volumes could plummet once the tax is enforced. The disparity in tax treatment between traditional financial instruments and cryptocurrencies is a major point of contention, with crypto investors facing a much lower basic deduction threshold compared to stock and bond investors.

Furthermore, the upcoming Virtual Asset User Protection Act, set to take effect this month, will subject financial authorities to scrutinize currently traded coins for appropriateness. This regulatory environment, coupled with the impending tax, has led to concerns about the future viability of crypto exchanges in South Korea.

Experts warn that the tax could deter investors and potentially lead to the closure of many exchanges next year if implemented as planned. The financial regulator’s efforts to monitor unusual crypto trading activities also pose challenges for altcoins that may struggle to meet regulatory standards.

As South Korea grapples with these regulatory changes, the future of the country’s crypto market remains uncertain, with stakeholders closely watching how these developments will impact investor sentiment and market dynamics.