SKN | South Korea Advances Stablecoin Rules as Lawmakers Push to Repeal Crypto Tax

Key Points:

• South Korea’s Financial Services Commission (FSC) plans to introduce a comprehensive Digital Asset Basic Act covering stablecoins, cryptocurrency exchanges and digital asset regulation.
• The proposed legislation would establish rules for stablecoin issuance, exchange operations, disclosures, internal controls and operational resilience.
• Opposition lawmakers are separately seeking to repeal South Korea’s planned 22% cryptocurrency tax, currently scheduled to take effect on Jan. 1, 2027.
• The developments highlight South Korea’s continued efforts to create a clearer regulatory framework for its rapidly growing cryptocurrency industry.

South Korea Moves Toward Comprehensive Crypto Legislation

South Korea’s Financial Services Commission (FSC) is preparing a government-backed Digital Asset Basic Act in cooperation with the ruling Democratic Party, aiming to establish a unified regulatory framework for the country’s cryptocurrency market.

According to local reports, the proposed legislation would consolidate several aspects of digital asset regulation into a single framework, addressing both stablecoins and broader cryptocurrency market oversight.

The initiative comes after months of legislative delays, with lawmakers struggling to reconcile multiple competing proposals currently under consideration in the National Assembly.

A consolidated bill could simplify negotiations by providing a central framework supported by both the government and the ruling party.

Proposed Law Targets Stablecoins and Exchanges

The planned Digital Asset Basic Act is expected to establish comprehensive rules governing South Korea’s digital asset ecosystem.

According to the reported proposal, the legislation would include provisions covering stablecoin issuance and circulation, licensing requirements for digital asset businesses, exchange operations, disclosure standards, internal governance and operational resilience.

The FSC has not yet announced when the bill will be formally introduced, and several policy issues remain unresolved.

Among the outstanding questions are whether issuers of Korean won-denominated stablecoins should be required to have majority bank ownership and whether ownership limits should apply to major cryptocurrency exchanges.

These issues continue to be debated as lawmakers seek to balance financial innovation with consumer protection and financial stability.

Opposition Seeks to Eliminate Planned Crypto Tax

Alongside discussions over digital asset regulation, opposition lawmakers are moving to repeal South Korea’s planned cryptocurrency income tax before it takes effect.

The proposal, introduced by People Power Party lawmaker Song Eon-seok, would remove provisions that impose taxes on income generated from transferring or lending digital assets.

The National Assembly’s Finance and Economic Planning Committee is expected to review the legislation before referring it to a tax subcommittee for further consideration.

A separate public petition calling for repeal of the cryptocurrency tax has also gathered more than 50,000 signatures, though committee review dates have not yet been scheduled.

Tax Debate Continues Ahead of 2027

Under current law, South Korea plans to introduce a 22% tax—comprising a 20% national tax and 2% local income tax—on annual cryptocurrency income exceeding 2.5 million won beginning Jan. 1, 2027.

The ruling Democratic Party and the Ministry of Economy and Finance continue to support implementation after several previous postponements.

Opposition lawmakers argue the policy unfairly treats cryptocurrency investors differently from many retail stock investors, who remain exempt from comparable taxation under existing rules.

The disagreement has become one of the central political issues surrounding South Korea’s evolving digital asset policy.

Regulatory Clarity Remains a Priority

South Korea remains one of the world’s largest cryptocurrency markets, with high levels of retail participation and growing institutional interest.

The government’s efforts to establish a comprehensive legal framework reflect broader global trends as regulators seek clearer rules for stablecoins, exchanges and digital asset service providers.

A unified regulatory structure could provide greater certainty for market participants while strengthening investor protections and supporting long-term industry development.

Outlook

South Korea’s proposed Digital Asset Basic Act marks another significant step toward building a comprehensive regulatory framework for cryptocurrencies and stablecoins. At the same time, the debate over the country’s planned crypto tax illustrates the ongoing challenge of balancing market growth with government oversight. As lawmakers continue negotiating both regulatory reforms and tax policy, the outcome could significantly influence the future development of one of Asia’s largest cryptocurrency markets.