Ruling party, gov't signal virtual asset tax delay as industry awaits regulatory overhaul

Although the ruling party and government stopped short of deciding whether to delay virtual asset taxation, their shared acknowledgment that the current framework needs improvement has led markets to lean toward a postponement of the January implementation.

The development opens the door for more time to prepare both the regulatory framework and the tax infrastructure — a relief for an already sluggish market. With the case for enacting a basic industry law now strengthened, industry players are growing more hopeful that the twin goals of building a regulatory foundation and easing the tax burden can be addressed together.

On Wednesday, the ruling party and government decided against confirming whether to grant an additional delay to the virtual asset tax scheduled to take effect in January, opting instead to conduct further reviews of outstanding regulatory issues. Industry players took particular note of the fact that a related government notice originally due by the end of this month now appears unlikely to be issued on schedule. With additional tax-related issues flagged for review, the notice could slip to next month. The National Tax Service, the enforcement body, has said it will continue preparing for taxation under current law while standing ready to adjust its approach if legislative changes result from future discussions between the National Assembly and the ruling party-government consultative process.

The industry hopes that a delay would provide more time for rushed tax preparations and allow the framework to be updated to reflect market developments. "It was already difficult to build the actual taxation systems, and the time remaining before year-end was tight," an official at a virtual asset exchange said. "An additional delay would give us a chance to prepare, and it would help if the regulatory improvements the industry has raised are reviewed and incorporated." The official added that exchanges can only invest meaningfully in internal data systems and related infrastructure once the tax standards and operational rules are clearly defined.

The industry is also closely watching a National Assembly forum set for Monday, which it sees as a gauge of the ruling party's direction on the issue. The forum, titled "Coin Exodus: We Can No Longer Turn a Blind Eye," is co-hosted by the offices of Democratic Party of Korea lawmakers Lee Gwang-jae, Min Byeong-deok, Park Min-gyu and Lee Gang-il, along with the Digital Asset Policy Forum. The virtual asset tax framework will be a central agenda item, with discussions expected to cover the distinction between capital gains and lending income, tax standards for non-standard transactions such as staking and airdrops, the prohibition on carrying forward losses, and the challenge of tracking taxable income from overseas transactions. Moon Gyeong-ho, head of the income tax division at the Ministry of Economy and Finance, will participate as a panelist.

Calls are also mounting for closer communication with regulators to strengthen the quality of the framework. Industry voices have urged the formation of a working group to jointly review tax administration practices and industry developments going forward. "The industry moves so fast that it is difficult for public officials to keep up with every development," said Kim Gyu-jin, chief executive of Tiger Research. "A working group where both sides can learn from and engage with each other would help Korea establish itself in the digital asset market."

There are also calls to use the enactment of a basic industry law as an opportunity to lay the institutional groundwork for both industry development and taxation together. Wednesday's consultative meeting produced a shared understanding that the direction for supporting and nurturing the virtual asset industry should be mapped out and a basic law enacted without delay. "Enacting a basic law means recognizing virtual assets as a legitimate industry and asset class," an exchange official said. "The tax framework needs to be designed accordingly."

Even if a tax delay is granted, some in the industry say the sector and tax authorities must continue to monitor readiness on an ongoing basis. "The scope of the tax framework needs to go beyond spot trading to cover staking, virtual asset lending, decentralized finance, tokenized equities and real-world asset tokenization," one industry official said. The official added that any conflicts with the basic law must be identified and that detailed case-by-case reviews are needed for each transaction type.