South Korea Consolidates Crypto Legislation as Tax Deadline Looms

The proposed Digital Asset Basic Act aims to expand beyond the existing Virtual Asset User Protection Act. While the current law focuses on custody and basic user safeguards, the new framework targets the broader market structure, including issuer conduct, disclosure requirements, and system resilience. Chairman Lee Eog-weon has signaled that the government intends to finalize these legislative efforts by the end of 2026, incorporating stricter anti-money-laundering protocols for stablecoin issuers.

Key policy disputes remain unresolved, specifically regarding the governance of won-backed stablecoins. The Bank of Korea advocates for bank-led consortiums to maintain majority control over issuers to protect monetary stability, while some industry participants argue that qualified non-bank entities should be permitted to operate under rigorous reserve requirements. Regulators are also debating potential ownership caps for major exchanges, a measure intended to prevent market concentration.

Parallel to these regulatory developments, political tension persists regarding the upcoming 22% levy on digital asset gains. Lawmaker Song Eon-seok has introduced a bill to repeal the tax, arguing that it unfairly targets crypto investors while retail stock gains remain largely exempt. Despite a public petition garnering over 50,000 signatures and opposition efforts to scrap the measure, the National Tax Service continues preparations for the January 1, 2027, implementation date. Unless the National Assembly reaches a consensus to delay or abolish the provision, the tax will remain in effect, mandating a 20% national levy plus a 2% local surcharge on annual income exceeding 2.5 million won.