Key Takeaways:
A petition demanding the removal of a planned 22% tax on cryptocurrency investment gains in South Korea has surpassed the 50,000-signature threshold, compelling the government to formally reconsider the policy ahead of its scheduled 2027 implementation.
"If taxation is enforced in order to secure short-term tax revenues, it is likely to lead to greater losses in the long term, namely, a contraction of industry and an outflow of capital and talent abroad," the petition submitted to the South Korea Assembly states.
The petition, which has gathered more than 52,000 signatures, forces a review by the country’s Finance and Economic Planning Committee. Critics argue the 22% tax, set to take effect in January 2027, imposes excessive financial and reporting burdens on investors and unfairly penalizes digital assets compared to other classes like stocks. The petition also highlights that crypto markets represent one of the few remaining avenues for upward mobility for younger generations facing soaring real estate prices.
The proposed tax enters a market already showing signs of contraction under increasing regulatory pressure. The total value of crypto held by South Koreans fell from approximately 121.8 trillion won ($83.3 billion) in January 2025 to 60.6 trillion won ($41.4 billion) by February 2026, according to industry data. Daily trading volumes on the country's five largest exchanges, including Upbit and Bithumb, have likewise fallen from $11.6 billion to $3 billion in the same period, CoinGecko data shows.
This investor retreat is also being linked to other stringent controls. In March, the Financial Services Commission (FSC) and the Financial Intelligence Unit (FIU) proposed that all crypto transactions over 10 million won ($6,630) from foreign wallets be automatically flagged as suspicious. Crypto industry groups have pushed back, arguing the new Anti-Money Laundering (AML) and Know Your Customer (KYC) rules create a significant operational burden for exchanges and drive capital away from the region.
This article is for informational purposes only and does not constitute investment advice.
