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FollowingSouth Korea is about to implement a cryptocurrency tax: a catalyst for market transformation
As South Korea prepares to formally implement a cryptocurrency tax policy in January 2027, forecasts indicate that trading volumes on the country's major cryptocurrency exchanges may decline significantly. The implementation of the new tax system has prompted many cryptocurrency traders to consider switching to overseas exchanges, decentralized platforms or keeping their own wallets to avoid tax burdens.
Does the new tax system threaten the survival of local exchanges?
A survey conducted by Web3 research firm Tiger Research provides the main answer to the question of whether local exchanges will be hit by taxes. The survey, which involved 2,423 South Korean cryptocurrency investors, showed that usage of local exchanges may decline, with 73.1% of respondents saying they may alienate these platforms. At the same time, 68.1% mentioned that they would prefer to use overseas exchanges, and 64.2% said they might prefer decentralized exchanges (DEX) or peer-to-peer trading.
What is the impact ofon large trading platforms?
Tiger Research provides a comprehensive overview of the expected financial impact on major exchanges in South Korea. They predict that annual transaction volume on platforms such as Upbit, Bithumb and Coinone will drop from approximately 859.8 trillion won in 2026 to approximately 601.9 trillion won in 2027. This means that a potential loss in trading volume is close to 258 trillion won.
In addition, revenue from these exchanges is expected to fall by 29.5%, from 1.033 trillion won to 728.2 billion won.
Current legislation stipulates that starting from January 2027, local income tax including a 22% tax rate will be levied on cryptocurrency transfers or loan capital gains exceeding 2.5 million won per year.
- Trading volume on local exchanges may decrease by 30%.
- Revenue from major platforms may face a 29.5% decline.
- Investors are increasingly interested in overseas exchanges and decentralized trading.
- South Korea's regulatory environment is rapidly evolving, affecting traditional trading channels.
While taxes are discussed in South Korea, companies such as Hana Bank and Upbit Global are exploring partnerships to ensure compliant digital asset transfers. This includes verifying sender and recipient information and securely transmitting data, bridging the gap between financial institutions and virtual asset service providers.
