South Korea is on the brink of finalizing its Digital Asset Basic Act, a comprehensive framework aimed at regulating the burgeoning cryptocurrency sector. During a parliamentary hearing on October 22, Financial Services Commission Chairman Lee Eog-weon confirmed the bill’s progress, signaling a significant step forward for the nation’s digital asset landscape.
The proposed legislation is set to introduce licensing requirements for cryptocurrency exchanges, establish a clear definition of digital assets, and create guidelines for stablecoin issuers. This initiative coincides with the growing interest from businesses exploring innovative services, such as the recent announcement of stablecoin payment collaborations between MoonPay and Dunamu.
However, before the new regulations can be enacted, lawmakers must thoroughly review the government’s proposal. Key issues under discussion include who will be authorized to issue stablecoins pegged to the Korean won and the necessary safeguards that these issuers must implement. Parliamentary committees are expected to delve into the details of the bill in November, with the potential for modifications based on governmental submissions.
Taxation Challenges Loom
Adding complexity to the regulatory landscape is South Korea’s planned cryptocurrency tax, which proposes a 22% tax rate on annual crypto income exceeding 2.5 million won. This tax initiative has already faced three delays, and the start date of January 1, 2027, remains under scrutiny. Countries worldwide, including France, are also grappling with similar tax-related discussions.
Public sentiment is increasingly vocal against the impending tax, with two petitions circulating that have gathered over 50,000 signatures each—one seeking to abolish the tax altogether and another advocating for a two-year postponement. Democratic Party leader Kim Min-seok emphasized the need for the government to weigh these opposing views before reaching a conclusion.
Tax Authority Readiness Under Question
As the deadline approaches, exchange operators are pressing for clearer reporting standards and additional time to adapt their systems to the new tax regime. Concerns have been raised about accurately tracking trades on foreign platforms and managing gains from various digital assets. Meanwhile, discussions continue regarding the issuance of a Korean won-backed settlement token, which is still pending regulatory approval.
The National Tax Service is working diligently to finalize its draft tax guidance by October 30, with plans for reviews and public consultations slated for November. The South Korean government remains committed to gathering insights from exchanges, experts, and lawmakers alike, underscoring the importance of a well-rounded approach to digital asset regulation.
