South Korea’s National Assembly will formally review a proposal to abolish a planned 22% tax on cryptocurrency gains after an online petition passed the 50,000-signature threshold required for legislative consideration.
Officials said the petition hit the mark at 11:23 a.m. local time on Thursday, just eight days after it was filed. Under existing rules, any petition that meets this threshold is automatically referred to the relevant parliamentary committee.
The review will determine whether lawmakers move ahead with the tax as scheduled in 2027, amend it, or cancel it entirely.
Petition forces parliamentary review
The petitioner, who has not been publicly identified, argued that taxing digital asset gains is unfair because income taxes on traditional financial products such as stocks and bonds have already been withdrawn.
The submission said:
- the digital asset market still lacks proper consumer protection, citing recurring fraud cases and low-quality token listings
- sharp price swings make a uniform tax regime unsuitable for these assets
- authorities should prioritize innovation and global competitiveness over tax collection
The current framework calls for a 22% tax on annual digital asset income above 2.5 million won, roughly $1,650–$1,800, depending on the reference rate. The introduction of this tax has already been delayed three times amid disputes over technical readiness and perceived inequities with other asset classes.
Core dispute: fairness of digital asset taxation
The petitioner’s core argument centers on the relative treatment of digital assets versus traditional financial products. While taxes on gains from stocks and bonds have been withdrawn, the government still plans to apply a 22% levy on cryptocurrency income above the specified threshold.
Critics contend that this approach creates a structural imbalance, effectively penalizing participants in the digital asset economy compared with stock market investors. Supporters of the petition argue that without comparable tax treatment, South Korea risks discouraging innovation and pushing crypto activity to other jurisdictions.
Government and political split
Earlier in May, the National Tax Service said it still plans to implement the tax in 2027, maintaining its stance despite public opposition and infrastructure concerns.
The Ministry of Economy and Finance has repeatedly backed the timetable, while some political forces are now openly challenging it. Jeong Tae-ho of the Democratic Party has said the tax should take effect as scheduled, noting it has already been postponed several times.
This split between the executive branch and parts of the legislature is likely to sharpen as the parliamentary review begins.
Committee review and potential outcomes
The petition has been sent to the National Assembly’s finance and economy planning committee, which will:
- review the arguments presented in the petition
- examine the existing tax framework and implementation readiness
- decide whether to advance a motion to alter, delay, or abolish the tax
A key point of debate will be the petitioner’s claim that the policy treats digital asset traders less favorably than stock market participants, who no longer face comparable income taxes.
Any move by the committee to draft or support amendments could signal a shift in tax policy, while a decision to uphold the existing framework would reinforce the government’s current course.
Impact on a major global crypto market
This policy debate is unfolding in one of the world’s most active cryptocurrency markets. In 2026, trades denominated in the Korean won accounted for about 30% of global spot volume, second only to the U.S. dollar.
Recent data point to a cooling domestic market:
- the value of crypto assets held by residents fell from 121.8 trillion won in January 2025 to 60.6 trillion won in February 2026
- daily trading volumes on the five largest local exchanges dropped from $11.6 billion in December 2024 to $3 billion in February 2026
Market participants have attributed part of this contraction to regulatory uncertainty, including the pending tax.
Altcoin-heavy market amplifies policy risk
South Korea’s market is highly concentrated in alternative digital assets, which account for about 85% of domestic activity. That concentration increases the potential reach of any tax decision across a broad range of tokens.
Traders are likely to watch closely for:
- statements from the finance and economy planning committee
- comments from key ministries, particularly finance and the tax service
- public positions from major political parties ahead of any vote
Clear signs of consensus either for or against the 22% tax could precede sharp shifts in trading volumes and price volatility in the local market.
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