South Korea's crypto bill advances, tax repeal faces key test

South Korea's Financial Services Commission told the National Assembly it plans to prepare a consolidated Digital Asset Basic Act with the ruling Democratic Party. The announcement came ahead of a July 29 policy briefing.

The proposed framework would set rules for stablecoins, exchanges, disclosures, internal controls and system resilience. It would also define digital asset businesses and regulate their conduct. The FSC has not completed the bill's wording or announced a filing date.

Separately, the National Assembly's finance committee was scheduled to table an opposition amendment seeking to remove the crypto income tax before its Jan. 1, 2027 start date. Lawmaker Song Eon-seok introduced bill number 2217609 on March 19. It would delete the Income Tax Act provision covering income from transferring or lending digital assets. The opposition argues that taxing ordinary crypto investors while most retail stock gains remain exempt is unfair, according to crypto.news.

Under current law, annual crypto income above 2.5 million won faces a 20% national tax and a 2% local income tax from Jan. 1, 2027. The tax has been postponed three times since its original 2022 start date. The government and ruling party support implementation. Tax officials have said the National Tax Service is preparing guidance and has established a dedicated digital asset unit, the source said.

A central dispute in the legislative process is whether issuers of won-backed stablecoins must be controlled by bank-led consortiums holding at least 50% plus one share. The regulator has repeatedly said that issuer ownership rules have not been finalised. The Bank of Korea supports giving banks a leading role, arguing that stablecoins could affect monetary and financial stability. Industry participants and some lawmakers support allowing qualified non-bank issuers under licensing and reserve requirements.