Crypto industry says stablecoins should be exempt from asset income tax [Crypto360]

As the National Tax Service prepares to draft rules on virtual asset taxation by October, the digital asset industry has argued that the current system needs an overhaul. Industry representatives say investment-type assets and stablecoins that may eventually serve as payment instruments should not be lumped together and taxed uniformly as miscellaneous income. Because the legal status of virtual assets and the tax standards for different transaction types have not been sufficiently established, the industry is calling for a review of the taxation timeline once related laws, including the Digital Asset Basic Act, are put in place.

According to industry sources Friday, the Digital Asset Exchange Alliance, known as DAXA, has compiled an opinion paper titled "Virtual Asset Industry Opinion on Virtual Asset Income Taxation" that lays out these concerns.

The industry pointed out that virtual assets vary in nature — stablecoins, investment-type assets and payment-type assets among them — yet the current system taxes all of them as miscellaneous income without distinction. It suggested that if stablecoins come to be recognized as a means of external payment, exempting them from taxation altogether should be considered.

The industry also raised concerns over the inability to carry forward losses. Since virtual asset income is classified as miscellaneous income, an investor who has accumulated losses over a long period must still pay tax on any profit realized in a given year. The industry proposed raising the current basic deduction limit of 2.5 million won ($1,870) per year and introducing a loss carryforward system spanning at least five years.

Calculating acquisition cost poses another challenge. Virtual assets transferred from overseas exchanges or personal wallets into domestic exchanges make it difficult for operators to verify the original acquisition time and price. Even after the Crypto-Asset Reporting Framework takes effect, many jurisdictions home to major overseas exchanges will not apply it until 2028, meaning the industry expects a gap of at least a year in information exchange.

The industry also noted that under current transaction statements, the acquisition cost is left blank for assets transferred in from outside sources or acquired through inheritance. It added that transactions that do not represent an actual acquisition — such as custody deposits and withdrawals, or staking and unstaking — are also being classified as "transfers or inflows," creating further confusion.

Having to respond to multiple regulatory changes within a short span of time was cited as another burden. The industry noted that while operators were given a one-year grace period to comply with the revised Act on Reporting and Using Specified Financial Transaction Information, the tax infrastructure is set to take effect with no such preparation period. It added that the tax system is also linked to data on customer verification, the travel rule, damage compensation and overseas asset transfers, meaning its design will inevitably remain in flux until those preceding systems are firmly established.

Meanwhile, the National Tax Service is moving to speed up work on detailed taxation standards with the goal of finalizing its rules by October. The agency recently ran a three-week digital asset training program at its National Tax Officials Training Institute in Jeju, and it is now expanding separate training and research efforts. Officials are refining taxation criteria and tax calculation standards for different transaction types based on input from outside experts. The National Tax Service has established a Digital Asset Management Division under its Individual Taxation Bureau to serve as the control tower for related taxation work.