Youth Backlash Grows Ahead of 2027 Crypto Tax Implementation
Ahead of the virtual asset (crypto) taxation set to take effect on January 1, 2027, opposition voices among young investors are growing as the burden of proving 'acquisition cost (the price at which coins were bought)' for overseas exchange users and tax standards heavier than those for stocks come under scrutiny. Heo Jun-young, an economics professor at Sogang University who recently appeared on the YouTube channel 'Park Sung-taek's News Show,' explained, "As of the end of 2024, people in their 20s and 30s accounted for about 50% of accounts on domestic virtual asset exchanges," adding that "about 70% of individual investors are small-scale investors holding virtual assets worth less than 500,000 won."
The core of the fairness controversy lies in the difference in tax standards between stocks and crypto. Most small shareholders trading domestic listed stocks on exchanges do not pay capital gains tax on trading profits. By contrast, virtual asset gains are taxed at 22% (20% national tax plus 2% local income tax) on profits above an annual basic deduction of 2.5 million won, and are subject to tax as other income because they lack a classification standard. Of course, stocks are also taxable for large shareholders and investors in unlisted shares.
The difference in tax treatment between spot and futures trading of virtual assets was also flagged as a problem. Tax outcomes vary depending on the type of transaction. Professor Heo said, "Under relevant laws, the legal basis for taxing virtual asset futures trading is not as sufficient as for spot trading, which can produce different results," adding, "If similar transactions in economic effect are taxed differently depending on their legal classification, investors may feel it is unfair."
The burden of documentation for overseas exchange users is also cited as an obstacle. Reporter Ko explained, "Domestic exchanges automatically submit transaction data to the National Tax Service, but with overseas exchanges, the burden of proof falls on the investors themselves." In other words, investors who bought and sold coins on overseas exchanges must obtain transaction records themselves and prove their purchase amounts to receive deductions. Under this structure, the burden of proving acquisition costs falls disproportionately on individual investors with limited means to obtain records. There is a disparity in burden between high-net-worth investors who can afford tax professionals and small-scale investors who lack the means of verification.
Crypto taxation has been postponed three times over five years since the law was enacted in 2020. Professor Heo said, "Simply delaying taxation will not solve the problem; the loopholes in the system must be fixed during the grace period."
