South Korea’s Upcoming Crypto Tax: A Catalyst for Market Shift

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As South Korea prepares for the enactment of a cryptocurrency tax in January 2027, there are forecasts that this could lead to a significant drop in trading volumes at the nation’s major crypto exchanges. The imposition of the new tax is prompting many crypto traders to consider switching to foreign exchanges, decentralized platforms, or personal wallets to avoid the tax burden.

Is the New Tax Threatening Local Exchanges?

The question of whether local exchanges will suffer due to the tax is primarily answered by a survey conducted by Web3 research firm Tiger Research. Involving 2,423 South Korean crypto investors, the survey reveals a possible decline in the usage of local exchanges, with 73.1% of the respondents indicating they might steer away from these platforms. Meanwhile, 68.1% mentioned an increased willingness to engage with foreign exchanges, and 64.2% suggested they may favor decentralized exchanges (DEX) or peer-to-peer transactions.

Financial Implications for Major Exchange Platforms?

The anticipated financial impact on major South Korean exchanges is comprehensively outlined by Tiger Research. They predict that the annual trading volume for platforms such as Upbit, Bithumb, and Coinone could decrease from approximately 859.8 trillion won in 2026 to around 601.9 trillion won in 2027. Consequently, this represents a potential loss of close to 258 trillion won in trading volume.

Revenue across these exchanges is expected to drop by 29.5%, plummeting from 1.033 trillion won to 728.2 billion won.

Currently, the legislation dictates that starting from January 2027, a local income tax, inclusive of a 22% rate, will be levied on capital gains over 2.5 million won annually from cryptocurrency transfers or loans.

• Local exchanges may see a 30% reduction in transaction volume.
• Major platforms could face a 29.5% drop in revenue.
• Investors show a heightened interest in foreign exchanges and decentralized trading.
• The regulatory landscape in South Korea is rapidly evolving, impacting traditional trading channels.

While tax discussions unfold in South Korea, companies like Hana Bank and Upbit Global are exploring partnerships to ensure compliant digital asset transfers. This includes verifying sender and receiver information and securely transmitting data, bridging the gap between financial institutions and virtual asset service providers.