A petition demanding the abolition of the 22% tax on cryptocurrency investment returns in South Korea has reached the 50,000 signature threshold required for the Finance and Economic Planning Committee to review objections to the new tax system.
According to the petition, the proposed 22% tax rate, which will take effect in January 2027, will impose a financial and reporting "burden" on investors, while also limiting upward mobility for young people who are being excluded from the housing market due to soaring property prices.
The petition has garnered over 52,000 signatures. Source: South Korean National Assembly
The petition also argues that imposing a 22% tax on crypto gains, while granting preferential tax treatment to other asset classes, would weaken South Korea's share of the crypto market. The petition's authors wrote in a translated statement:
"If taxes are imposed to ensure short-term tax revenue, it is likely to lead to greater losses in the long run, namely industrial contraction and the outflow of capital and talent overseas."
South Korea is a major cryptocurrency hub in the Asia-Pacific region. According to the local news agency Yonhap, as of March 2025, approximately 32% of South Korea's population holds cryptocurrency. However, due to continued pressure on cryptocurrency prices, the holding rate has declined this year.
South Korea's crypto market shrinks under proposals for stricter regulations
Industry data shows that the total value of crypto assets held by South Koreans has decreased from approximately 121.8 trillion won in January 2025 to approximately 60.6 trillion won (US$41.4 billion) in February 2026.
The daily trading volume of South Korea's five major cryptocurrency exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax, also dropped from $11.6 billion in December 2024 to just $3 billion in February.
Daily trading volume of South Korea's largest cryptocurrency exchange. Source: CoinGecko
Critics of these policies say that South Korea’s stricter anti-money laundering (AML) regulations and Know Your Customer (KYC) controls are also driving investors out of the industry.
In March, South Korea’s Financial Services Commission (FSC) and Financial Intelligence Unit (FIU) proposed that all crypto transactions involving more than 10 million won (US$6,630) transferred to or out of foreign crypto wallets should be automatically flagged as suspicious transactions.
The country's crypto industry advocacy group has opposed the new rules, arguing that the reporting requirements would place an operational burden on exchanges.
