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South Korea plans stablecoin rules as opposition pushes crypto tax repeal
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- DeepHorus
South Korea's Financial Services Commission (FSC) plans to draft a consolidated Digital Asset Basic Act with the ruling Democratic Party, aiming to establish a government-backed regulatory framework for stablecoins and cryptocurrency exchanges after months of legislative delays. Meanwhile, opposition lawmakers are pushing to repeal a planned 22% crypto income tax scheduled for implementation in 2027, citing fairness concerns. The dual developments signal a pivotal moment for South Korea's digital asset policy landscape.
According to an Edaily report published Wednesday, the FSC informed the National Assembly ahead of a policy briefing that it intends to introduce a consolidated bill covering stablecoin issuance and circulation, digital asset business rules, exchange entry requirements, disclosures, internal controls, and system-resilience standards. Currently, 10 separate digital asset and stablecoin bills are pending in Parliament, with disagreements preventing the country from finalizing its second-stage crypto legislation. A consolidated government-ruling party proposal could provide a central framework for negotiations.
Key facts reveal that the consolidated bill has not yet been finalized in terms of timing or specifics. Major disputes remain, including whether won-denominated stablecoin issuers must be majority bank-owned and whether ownership limits should apply to major crypto exchanges. The FSC's move comes as South Korea seeks to regulate its vibrant crypto market, which saw trading volumes surge in 2024.
The implications are significant for both domestic and international crypto stakeholders. A unified bill could streamline regulations and provide clarity for exchanges and stablecoin issuers, potentially attracting institutional investment. However, unresolved disputes may delay passage, leaving the market in regulatory limbo. The separate tax repeal effort adds another layer of complexity, as it challenges the government's fiscal policy.
Reactions reveal a political divide. The opposition's crypto tax repeal bill, introduced on March 19 by People Power Party lawmaker Song Eon-seok, aims to delete the provision taxing digital asset income. The bill was scheduled for discussion in the National Assembly's Finance and Economic Planning Committee on Wednesday. A separate repeal petition backed by over 50,000 people is also pending. The government and ruling Democratic Party support implementing the tax, while opposition lawmakers argue that taxing crypto while most stock investors remain exempt is unfair.
Looking ahead, the FSC has not set a timeline for introducing the consolidated bill, and key subcommittees for reviewing the tax repeal have not been fully constituted. From January 1, 2027, income from transferring or lending crypto exceeding 2.5 million won (about $1,700) annually will face a 20% tax plus a 2% local income tax, unless repealed. The outcome of these legislative efforts will shape South Korea's role as a global crypto hub and influence investor confidence in the region.
