South Korea has locked in a 22% tax on crypto gains — 20% national plus 2% local — set to kick off in January 2027. The levy applies to annual gains above 2.5 million won (roughly $1,740), and investors can't carry forward losses to offset future profits. First tax returns are due in May 2028, covering income earned in 2027. The confirmation comes as trading volumes across the country's five main exchanges have already plunged 54.6% in the first half of 2026 compared to the same period last year.
The tax, at last
This isn't a new idea. The tax was originally approved in 2020 for a January 2022 start, then delayed to 2025, and again to 2027. Each postponement came amid fierce industry pushback and concerns about driving traders offshore. Now the government has held the line — no further delays announced. But the design has drawn sharp criticism. People Power Party lawmaker Kim Sang-hoon warned the structure could push traders to overseas exchanges, decentralized platforms, or peer-to-peer markets. The lack of loss carryforward is a particular sore point: in a volatile market, a trader who loses money one year can't use that loss to reduce future tax bills.
Volume drop and market share shift
The numbers tell a stark story. Trading volume across South Korea's five main exchanges — Upbit, Bithumb, Coinone, Korbit, and Gopax — fell more than half in the first six months of 2026 versus the same stretch in 2025. That's a massive contraction, and it's happening before the tax even takes effect. Within that shrinking pie, Upbit's share actually grew — from 62.3% to 67.4% in July 2026 — even as its own volume dropped 10% that month. Bithumb, the No. 2 exchange, saw its share slide from 30.7% to 27.1% over the same period. The smaller exchanges are feeling the squeeze most. Coinone, Korbit, and Gopax are reportedly exploring partnerships with securities firms and institutional services to find new revenue streams.
Political pushback
The tax isn't a done deal yet. An opposition bill filed in March 2026 seeks to remove crypto income from the Income Tax Act entirely. That would effectively repeal the levy. With the next election cycle approaching, another delay — or outright repeal — remains possible. Kim Sang-hoon's criticism from within the ruling party adds pressure. The government has to weigh the revenue potential against the risk of driving activity into unregulated channels, where it can't be taxed at all.
The next concrete deadline is May 2028, when the first returns are due. But between now and then, the opposition bill will work its way through the National Assembly. If it gains traction, the tax could be scrapped before it ever takes effect. If not, exchanges and traders have until January 2027 to prepare for a system that offers no loss offsets and a relatively low threshold. The question hanging over Seoul is whether the tax will actually land this time — or get delayed for a fourth time.
