South Korea may delay its crypto tax a fourth time while the Bank of Korea plans to track your coins: both sides of the story

Will South Korea tax crypto in 2027? It is looking less likely. The country's 22 percent tax on crypto gains, already delayed three times, faces a fourth postponement after lawmakers from both major parties moved to push it back, as reported by Chosun Biz. At the same time, the Bank of Korea is preparing rules that would let it track the domestic crypto balances of anyone who has moved coins overseas.

The two stories pull in opposite directions. One promises investors relief from tax. The other promises the state far more visibility into what they hold. For Korea's millions of crypto traders, among the most active anywhere in the world, the combination defines the next phase of regulation: lighter on taxes for now, much heavier on surveillance.

Why the crypto tax may slip again

The tax was designed as a 22 percent levy on digital asset gains, including lending income, with an exemption for amounts below 2.5 million won. It has been postponed three times, partly because of unresolved questions about how to treat staking, airdrops and decentralised finance, according to Crypto Briefing.

Momentum for a fourth delay is now bipartisan. On 16 October, Democratic Party lawmaker Park Min-gyu introduced a bill to amend the Income Tax Act and delay crypto taxation by an additional two years, with co sponsors including Kang Jun-hyun, Min Byung-deok and Park Hong-bae. Park argued that taxation should follow the Digital Asset Basic Act, which would create a comprehensive framework for the market, and pointed to the United States joining the Crypto-Asset Reporting Framework in 2029 as a reason to adjust timing.

The opposition People Power Party has already adopted a delay as party policy, and several of its lawmakers have filed bills to postpone or even abolish the tax. Officials have also met crypto exchanges to discuss the issue.

The case against another delay

Not everyone agrees. Cho Kuk, head of policy at the Rebuilding Korea Party, criticised the bipartisan push. "In an era of severe asset inequality, delaying asset taxation is the same as delaying efforts to reduce inequality," he wrote on 21 October, adding that "if the tax code is swayed back and forth by the gains and losses of the two major parties, only diligent citizens who have paid their taxes faithfully will end up as fools."

Cho noted that the United States, the United Kingdom and Australia already tax virtual assets, and argued that the lesson from overseas is to tax crypto while improving the system rather than postponing again. His intervention highlights the political sensitivity of the issue: millions of Korean voters hold crypto, and no major party wants to be blamed for taxing them.

Korea's crypto tax keeps getting delayed for the same reason it was proposed: millions of voters hold coins, and every party can count.

The repeated delays also create uncertainty for exchanges such as Upbit and Bithumb, which must prepare systems to calculate and report gains without knowing when, or whether, the tax will apply.

What the Bank of Korea wants to track

While the tax stalls, monitoring is accelerating. The Bank of Korea is preparing a reporting system to prevent illegal foreign exchange transactions through cross border crypto transfers, under the amended Foreign Exchange Transactions Act that takes effect on 3 December, according to Businesskorea.

Under a draft manual sent to the Digital Asset eXchange Alliance on 2 October, exchanges would have to report the details of crypto outflows and inflows completed each day to the Bank of Korea by 11 a.m. the following day, including the sender and receiver, transaction details and resident registration numbers. They would also submit a monthly balance report with the personal information and holdings of users.

The scope is broad. Users would be included if they have made even a single overseas crypto transfer since 19 July 2024, and the balance report would cover dormant accounts, delisted assets and staked assets. The information would be shared with the National Tax Service, the Korea Customs Service, the Financial Supervisory Service and the country's financial crime watchdog to investigate illegal foreign exchange transactions.

Why the reporting plan is controversial

The plan surfaced through documents obtained by People Power Party lawmaker Park Soo-young and has sparked controversy over privacy and proportionality. Critics argue that a single transfer more than two years ago should not put a user's entire balance under monthly reporting. The Bank of Korea has said the manual is a draft and that the final version will be confirmed after discussions with relevant parties.

The central bank's concern is real. Korea has long battled the so called kimchi premium, when crypto trades at higher prices domestically than abroad, which encourages people to move coins across borders in ways that can evade foreign exchange controls. The Bank of Korea has also pushed for stablecoins to be covered by foreign exchange law, according to reports. The key issues for investors include:

• Whether the crypto tax is delayed again beyond January 2027
• How the final Bank of Korea reporting format treats past overseas transfers
• Which personal data exchanges must share with tax and customs authorities
• How staked, dormant and delisted assets are reported
• Whether stricter monitoring pushes traders toward offshore platforms

Korea has already moved against offshore platforms, blocking access to dozens of unregistered exchanges, as we covered in our report on Korea's block on 27 crypto exchanges.

What it means for Korean crypto traders

For traders, the near term picture is mixed. A fourth tax delay would keep gains untaxed for longer, which supports trading activity. But the Bank of Korea's reporting rules mean that anyone who moves crypto abroad, even once, could find their holdings reported to multiple government agencies every month from December.

The direction of travel is clear. Korea is building the infrastructure to see crypto flows in detail before it decides how to tax them. Whether the tax arrives in 2027 or 2029, the data the government will hold by then will make enforcement far easier.

South Korea is taking two very different steps on crypto at once: easing off on taxation while sharply increasing oversight of cross border flows. For investors, the likely result is untaxed gains for a while longer but far less privacy, especially for anyone who has moved coins abroad. The final shape of both policies will be decided in the coming weeks, with 3 December the first hard deadline.