South Korea plans stablecoin rules as opposition pushes crypto tax repeal
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- South Korea's Financial Services Commission (FSC) plans to draft a consolidated Digital Asset Basic Act with the ruling Democratic Party, covering stablecoin issuance and circulation, exchange entry requirements, disclosures, internal controls and system-resilience standards.
- The unified proposal would resolve 10 separate digital asset and stablecoin bills currently stalled in Parliament amid disagreements over second-stage crypto legislation.
- Key unresolved disputes include whether won-denominated stablecoin issuers must be majority bank-owned and whether ownership limits should apply to major crypto exchanges.
- People Power Party lawmaker Song Eon-seok introduced an Income Tax Act amendment on March 19 to abolish South Korea's crypto income tax before its scheduled Jan. 1, 2027 implementation.
- Under current law, crypto transfer and lending income exceeding 2.5 million won (about $1,700) annually will face a 20% tax plus a 2% local income tax starting Jan. 1, 2027.
- A separate repeal petition backed by more than 50,000 people is heading to a petitions subcommittee, though neither that subcommittee nor the tax subcommittee has been fully constituted.
- The opposition argues taxing crypto while most ordinary stock investors remain exempt is unfair; the government and ruling Democratic Party support proceeding with the tax.
Why it matters: After months of gridlock on 10 pending crypto bills, the FSC's unified proposal gives Parliament a central framework to pass second-stage rules — but disputes over bank ownership of won-stablecoin issuers and exchange ownership caps remain unresolved. The opposition's repeal push targets a 22% tax that would hit crypto investors earning above roughly $1,700 annually while ordinary stock investors stay exempt, a fairness argument the ruling party has so far rejected.
