South Korea is getting closer to introducing the "Digital Assets Basic Act," and financial regulatory authorities have entered the final stages of consultation. However, some members of parliament question whether it is appropriate to start taxing cryptocurrencies before the regulatory framework is completed.

According to a report by Yonhap News on October 22, Lee Eun-kyun, the chairman of the Financial Services Commission of South Korea ( FSC ), stated at the National Assembly's Political Affairs Committee that the legislative discussions related to this matter are nearing completion, and the authorities will push for the bill to proceed as soon as possible without any unnecessary delays.

During the parliamentary audit, Li Yiyuan made the aforementioned statement. Previously, opposition party members had questioned the slow progress of the government in advancing the cryptocurrency legislation it had promised.

National Power Party member Song Yanxi pointed out that officials promised to prepare a government proposal during a presidential briefing in July, but to this day, the finalized draft has not been publicly released.

This legislation, commonly referred to as the "Digital Assets Basic Law" or "Digital Assets Framework Law," is expected to establish rules for cryptocurrency companies, exchange licensing, and the issuance of stablecoins.

The terms are still under negotiation, especially regarding the regulation of trading platforms and the conditions under which companies can issue stablecoins denominated in Korean won.

In September this year, crypto.news reported that the second phase of the digital asset legislation plan was to be reviewed by Congress in November. FSC had already identified the Congressional Subcommittee on Legislative Review as the next venue for legislative discussions at that time.

No new submission date was set for this hearing in October, nor was it confirmed whether the members of parliament had reached an agreement on the unresolved clauses.

The framework will be established on top of South Korea's existing legislation for the protection of cryptocurrency investors. Current laws regulate the activities of some exchanges, but they do not provide a comprehensive system that covers the issuance of digital assets and corporate licensing, as proposed in this initiative.

One of the key points of discussion in parliament is whether investors will start paying income tax on cryptocurrencies before legislators complete the industry regulatory framework.

Song Yanxi believes that the government should first clarify the legal classification of digital assets and their applicable rules.

He called for the cancellation or suspension of this planned tax before lawmakers complete the necessary legislation.

Li Yiyuan did not support these two approaches. In response to questions about the implementation timeline, he stated that the Ministry of Finance is collecting opinions from relevant parties, and authorities should consider the specific circumstances involved in the tax arrangements.

South Korea currently plans to impose a comprehensive tax rate of 22% on the portion of annual cryptocurrency earnings that exceed 2.5 million Korean won.

This tax burden consists of 20% national tax and 2% local tax. The Congress introduced this framework through an amendment to the Income Tax Law in 2020, but the implementation has been postponed three times.

The current effective date is January 1, 2027. To extend it further, legislative action is required, and no decision was made regarding the modification of this date at the hearing on Thursday.

Despite the political pressure to delay implementation, the related preparatory work is still ongoing.

The South Korean National Tax Service has been formulating guidelines covering transactions such as staking rewards, airdrops, hard forks, and decentralized financial activities.

At a parliamentary hearing on October 13, tax officials stated that they were in discussions with exchanges regarding the reporting systems and the methods for handling transactions involving different cryptocurrencies.

A report on October 19th revealed that authorities are consulting with exchanges such as Upbit, Bithumb, Coinone, DigitalX, and Gopax to gather feedback on the difficulties involved in implementation.

According to a petition in September that called for a further two-year delay in implementation, the petition has already gathered the 50,000 signatures required to trigger congressional review.

However, the entry of this petition into legislative review will not automatically suspend taxation. The proposals from the opposition party, as well as the requests of some members of the ruling party, still require approval from Congress.

Tax officials still need to clarify how investors should calculate taxable income between different types of transactions, as well as how to declare transactions involving overseas platforms or privately controlled wallets.

The National Tax Service of South Korea is proceeding with administrative preparations according to the existing January schedule.

According to a report by Digital Asset on October 22, the institution plans to complete the draft cryptocurrency tax notification by October 30.

The timeline mentioned in the report indicates that a preliminary review will be conducted on November 6th, a public notice will be issued on November 30th, and the measures will officially come into effect on January 1, 2027.

At the same time, there are still unresolved issues regarding the proposed regulatory framework concerning the issuance of stablecoins. Policymakers have been discussing whether bank-led institutions should be given priority in issuing won-backed tokens, as well as whether cryptocurrency exchanges should be subject to shareholding restrictions.

The South Korean central bank expresses concerns about the private issuance of stablecoins, while continuing to advance its own work on tokenized deposits and institutional digital currency infrastructure.

The latest statements from financial regulatory authorities and the administrative schedule of tax departments neither indicate when Congress will receive the final version of the "Digital Assets Basic Law" nor when a vote on the further postponement of cryptocurrency taxes will take place.