South Korea’s crypto community is sounding the alarm over a looming 20% tax on crypto gains, set for 2025. The tax will apply to gains exceeding a 2.5 million won ($1,800) deduction, with an additional 2% local income tax.
Initially planned for 2021, this tax has been delayed multiple times. Domestic exchanges like Upbit, Bithumb, and Coinone warn that trading volumes will plummet once the tax is enforced. Unlike traditional investments, which are taxed on gains above $36,250, the crypto deduction is significantly lower, capturing almost all crypto investors.
The Virtual Asset User Protection Act will also take effect on the 19th, increasing scrutiny on traded coins. An anonymous crypto exchange spokesperson predicts that many exchanges may close next year if the tax proceeds as planned.
South Korea’s financial regulator is also setting up a system to monitor unusual crypto trading, posing challenges for altcoins. This comprehensive regulatory framework could reshape the market, emphasizing the need for strategic adaptation.
