Authors: Ekko An, Jay Jo, Tiger Research
Translation: Luffy, Foresight News
After three delays, South Korea will officially tax crypto asset gains starting from January 2027. With just over three months until the effective date, discussions on the topic have been intensifying. A petition submitted to Congress has garnered support from over 50,000 people. As the debate resurfaces, discussions should not be limited to supporting or opposing the taxation; there is a need to examine whether the current taxation plan fits the real trading scenarios of crypto assets.
Taxing crypto investment gains is one matter; whether the current plan can be implemented is another. Crypto assets circulate between domestic exchanges, overseas exchanges, personal wallets, and decentralized exchanges (DEXs), and investors often exchange different crypto assets. To ensure the tax system operates smoothly, fragmented trading records must be consolidated, and a unified set of rules must be established to calculate holding costs and actual profits and losses.
The issue is that if the supporting systems are not fully constructed, both investors and tax authorities will bear the burden. Investors will need to verify and provide evidence of their trading records and holding costs, while tax authorities will find it challenging to accurately identify taxable income and tax bases. Therefore, the core issue is not merely whether to impose taxes, but whether investors can accurately calculate gains and losses and complete tax declarations in real trading scenarios, and whether the transaction records can be effectively traced.
For this reason, the current discussions cannot be limited to supporting or opposing the tax; they must also evaluate whether the current plan aligns with the actual trading situation, what concerns investors have, and how the taxation will alter trading behavior and the local market landscape.
How do South Korean crypto investors view cryptocurrency taxes?
Tiger Research, in collaboration with South Korean polling agency PMI, conducted a survey with 2,423 South Korean crypto investors. The questionnaire covered attitudes towards taxation, implementation timeline, reasonableness of the current plan, completeness of the tax declaration system, and expected changes in investor trading behavior post-tax implementation.
Age distribution of opponents of crypto taxation in South Korea
Opposition to crypto taxation is present across all age groups, with a total of 73.7% of respondents opposing it. The opposition rate exceeds 75% among those in their 20s, 30s, and 40s; for those aged 50, 60, and above, the opposition rates are 61.5% and 63.9%, respectively. The 20 to 40 age group exhibits the strongest dissent, but opposition does not solely come from younger investors.
South Korean crypto investors are not entirely opposed to taxation
Simply supporting or opposing taxation does not fully capture investors' viewpoints. Among those who oppose the taxation, 51.5% said they could accept taxation if the issues with the current plan are adequately resolved. Meanwhile, among those who believe that crypto assets should be taxed, 74.5% think that the current plan should be delayed or modified rather than implemented as is.
The survey results indicate that many investors can differentiate between the principle of "crypto assets should be taxed" and the feasibility of "the current tax plan." Some investors who oppose taxation express willingness to accept it after system improvements; many who agree with the principle of taxation do not support the immediate implementation of the current plan. This disagreement becomes more apparent when investors evaluate the specific rules and the readiness of the system.
Main concerns of investors regarding the current taxation plan
Concerns of South Korean investors about crypto taxes
The detailed results of the survey reveal investors’ reasons for distinguishing between "taxation itself" and "the tax plan." Concerns are concentrated in three major areas:
- Whether the tax rate and deductions are appropriate and fair compared to other financial assets
- Whether the system accounts correctly for losses and acquisition costs when calculating taxable profits
- Whether the system is prepared to support tax declarations and payments, track transactions, and protect investors
Investors are not only concerned about whether crypto assets should be taxed; they are also worried about the level of tax burden, how taxable profits are calculated, and whether the entire plan can be implemented. The following sections will explore these three issues.
Is the tax burden fair?
Expected changes in trading behavior of investors in different age groups if South Korea's crypto tax is implemented
The majority of respondents hold negative views on the tax burden of the current plan. Among all respondents, 73.5% believe that a 22% tax rate is too high, and 65.2% think that the annual basic deduction of about $1,800 is too low. Additionally, 72.1% feel that the crypto asset tax rules are not fair compared to other financial assets.
Proportion of those opposing crypto taxes or supporting postponement based on income
Low-income investors also express strong concerns. Respondents with a monthly income below approximately $2,100 make up 24.9% of the total sample. Among this group, 87.9% oppose the implementation of the current plan and call for another delay, higher than the average of 82.9% among all respondents. This indicates that concerns about the current plan are not limited to high-income investors.
Seventy percent of investors believe the crypto tax will hinder wealth accumulation for young people
Respondents also worry that the policy will restrict wealth accumulation for young people. Overall, 73.0% of respondents believe that cryptocurrency taxation may limit wealth accumulation opportunities for people in their 20s and 30s. The concern is highest among respondents in their 20s at 78.7%, followed by 30-year-olds at 77.2%. Among all other age groups, the proportion supporting this view exceeds 65%.
The survey shows that investors are sensitive not only to tax rates and deduction amounts but also compare the fairness of rules against other financial assets. Low-income groups are equally sensitive to this issue, with investors of all ages concerned about the impact of the policy on young investors. Investors consider both the magnitude of the tax burden and the differentiated effects of the policy on different groups.
Can taxable profits be accurately calculated?
Concerns of investors regarding core terms of the current crypto tax framework
To accurately calculate taxable profits, the tax system must be able to assess investors' actual gains and losses and establish clear rules for losses, holding costs, and various types of crypto income. The survey found strong concerns among investors in all three areas.
First, 65.9% of respondents believe that the current rules for handling losses are unreasonable. The existing rules allow investors to offset capital gains with crypto asset losses within the same year, but losses cannot be carried forward to subsequent years to offset future gains.
Crypto investors often experience gains and losses that span multiple years, and the rules for loss offset directly impact the accuracy of taxable income calculations.
Investors' concerns about holding costs and transaction record tracing are even more pronounced: 70.6% of respondents are worried that they will have to rely on their own trading records and holding costs to calculate and declare gains and losses, which imposes a heavy burden.
Crypto assets can circulate between domestic and foreign CEXs as well as personal wallets, and investors frequently exchange different currencies. The more complex the transaction paths, the harder it is for investors to trace original holding costs and subsequent transactions accurately.
The sources of crypto income are very diverse, including trading, lending, staking and mining, airdrops, liquidity mining, etc. The current tax framework mainly covers gains from asset transfers and lending, leaving it unclear which earnings will be taxed and at what point taxes will apply. About 65% of respondents believe that the existing framework does not adequately cover various trading scenarios.
In summary, investors' focus extends beyond tax rates to include loss handling, recognition of holding costs, and defining different types of income. These rules ultimately determine whether taxable income from crypto assets can be accurately assessed based on actual profits and losses.
Is the supporting system ready?
Concerns of investors regarding the preparation work for the implementation of the crypto tax
A taxation system not only requires clear rules but also needs administrative and IT systems to support its implementation. In the survey, 66.4% of respondents believe the South Korean government is not adequately prepared; 65.7% find it difficult to track and tax transactions completely across domestic CEXs, overseas CEXs, and personal wallets; and 68.8% think that the burden of tax declaration and payment will be heavy for investors. Investors not only care about regulatory texts but also whether the plan can operate effectively in practice.
Crypto asset trading can occur outside South Korean domestic CEXs. Once investors use overseas CEXs and personal wallets, trading data becomes scattered across multiple channels, making it difficult to consolidate for taxation. Reliable transaction tracking and the burden on investors for tax declarations are key issues that need consideration.
Besides administrative and IT preparations, 85.1% of respondents believe that a protection framework for investors must be established before implementing taxation. Taxation will impose new tax obligations on investors, and beyond tax administration, a market protection mechanism is equally a prerequisite for implementation.
Respondents' views on the 2027 crypto tax implementation
The survey results regarding the implementation timeline further corroborate these concerns. 82.9% of respondents oppose the timely execution of the current plan or call for delays, and 75.2% believe that implementing the tax in 2027 is premature. The questionnaire continued to ask 1,823 respondents who chose to postpone: if the rules and preparations are still not completed by the scheduled time, what should be done? Among them, 93.4% believe that the tax should once again be postponed until the system is fully prepared.
For investors, the core issue is not merely delaying for a few years but whether the foundational conditions for implementation are genuinely ready, including tax administration, transaction data management, declaration systems, and investor protection.
Potential impacts on the South Korean market
Scale of funds flowing from South Korean exchanges to overseas exchanges
Investors’ attitudes toward the taxation plan suggest that trading behavior may change after the policy is implemented. A substantial amount of South Korean crypto funds has already flowed overseas. According to a previous report by Tiger Research, it is estimated that between 2021 and the first half of 2026, approximately 700 trillion won (around 490 billion dollars) will flow out to overseas markets. Investors are already commonly using trading channels beyond domestic CEXs, including overseas exchanges and personal wallets.
This survey evaluates the expected changes in investment scale and trading channels after the tax is implemented. The results show that investors may reduce their investments and decrease their use of domestic CEXs, turning to alternative trading channels. If these expectations translate into actual behavior, they will weaken the trading foundation of the South Korean crypto market and increase the difficulty for tax authorities to track taxable activities and market regulation.
Impact on domestic CEXs and the entire South Korean crypto industry
The survey predicts that taxation will lower investment willingness in crypto and reduce the use of domestic CEXs. 69.7% of respondents stated they would decrease or even stop investing in crypto, and 73.1% said they would reduce their usage of domestic CEXs. This will reduce the total amount of funds in the crypto market, while also lowering trading volumes in local exchanges.
66.4% of respondents believe that taxation will have a negative impact on the South Korean crypto market. If investors reduce their exposure to crypto assets and shift to other financial assets, the trading volume and liquidity in the local market will decline.
Trading volume and revenue of South Korea's top three crypto exchanges (Upbit, Bithumb, Coinone)
Tiger Research, in conjunction with data from this survey and trading volume changes in countries that have already implemented crypto taxes, estimates the changes in trading volume and revenue for the top exchanges. The calculations indicate that the annual trading volume for South Korea's three major exchanges—Upbit, Bithumb, and Coinone—may decrease from about $601 billion in 2026 to $421 billion in 2027, a reduction of about $180 billion, or 30%; during the same period, the revenue of the three exchanges is expected to drop from $722 million to $509 million, a decrease of $213 million, or 29.5%.
The contraction in trading activity may also affect the overall tax revenue from the crypto industry. A decrease in transaction fees will lead to reduced value-added tax income, and the decline in exchange profits will lower corporate income tax revenues.
While taxing crypto gains could create new tax revenues, a shrinking local market could simultaneously squeeze existing tax revenue, diminishing the overall income effect brought by the new tax. The decline in liquidity and user numbers at domestic CEXs will also undermine the foundation of supporting financial services like custody and prime brokerage.
Shift of trading to offshore channels, limitations of the CARF framework
Use of global centralized exchanges (CEX) and decentralized exchanges (DEX) by South Korean investors
If taxation takes effect and investors decrease trading on domestic CEXs, some funds will flow to overseas CEXs and personal wallets. Among investors planning to reduce their use of domestic exchanges, 88.0% indicated they might increase their use of overseas CEXs or self-custody wallets; among all respondents, 60.0% have already used overseas CEXs, and 33.3% have used DEXs.
Expected changes in trading channels by age group
Younger investors show the strongest willingness to turn to offshore channels. Among respondents in their 20s, 76.8% indicated that they would use overseas CEXs more following the implementation of tax; 73.2% would increase their use of DEXs and P2P transactions via personal wallets. Investors who have used overseas exchanges and on-chain services find it easier to shift their trading out of local platforms.
As more trading moves out of local service providers, the difficulty for tax authorities to obtain complete trading information will increase. The crypto income reporting framework CARF can help mitigate this gap: it requires crypto service providers to report user and transaction information, allowing tax authorities in different countries to exchange relevant data.
However, the timelines for launching CARF data exchange vary by country: South Korea plans to start in 2027; Hong Kong, Singapore, and the UAE plan for 2028; while the United States will wait until 2029. This time difference may restrict the acquisition of overseas trading data in the early stages of taxation.
Proportion of trades not covered by CARF within different crypto tax jurisdictions
Simultaneously, CARF cannot cover all trading paths. According to Chainalysis data, in 2025, 59.1% of assets flowing out of Japanese CEXs went to channels not covered by CARF; this proportion is 65.2% in the UK, 75.4% in the US, and 76.6% in Italy. In Italy, this proportion rose from 50.4% in 2024 to 76.6% in 2025; during the same period, assets transferred to personal wallets increased by 45.7%.
The data above does not directly prove that taxation leads to capital outflows, but it indicates that even in countries with established crypto taxation and reporting systems, a significant volume of transactions cannot solely rely on service providers for comprehensive tracking.
This information gap also raises concerns about tax fairness. Tax authorities can easily verify transactions on domestic CEXs through service provider reports; however, transactions on overseas CEXs and personal wallets largely depend on voluntary self-reporting and subsequent verification by investors. If investors perceive significant differences in the regulatory oversight of different transaction channels, it will further encourage a shift towards overseas CEXs and DEXs.
Before implementing taxation, the South Korean government needs to clarify rules regarding the determination of holding costs and information reporting; at the same time, it should establish mechanisms to verify gains and losses arising from transactions on overseas CEXs and personal wallets.
Implementing taxation hastily will harm the industry and tax revenue
The core contradiction does not lie in whether to impose taxes, but in whether South Korea should pursue the current plan in 2027 when the supporting systems are not yet ready. Current laws stipulate that the income tax on crypto assets will take effect in January 2027. This survey indicates that investors can differentiate between the principle of taxation and the existing plan; even among those who agree that crypto should be taxed, there is a belief that the rules need optimization; some opponents also express acceptance of taxation after system improvements.
Policymakers must assess that implementing taxation with inadequate preparations will lead to market shocks. As analyzed earlier, domestic crypto investment and trading volumes may decline, and trading activities may shift to overseas CEXs and personal wallets.
Such changes will weaken the trading foundation and competitiveness of the domestic market and increase the difficulty for tax authorities to track the tax base due to the scattering of transaction data. Creating new tax sources and effectively managing the tax base are two independent challenges.
Policymakers should first evaluate whether the tax system can operate normally in the real market environment, rather than finalizing the implementation date and later fixing the loopholes. The survey shows that rather than a specific year, investors care more about whether the entire system is ready. Policymakers should clarify the conditions for readiness before determining the start date for taxation.
Three key areas need focus. First, when assessing the preparations for taxation, the overall state of market regulation should also be considered. Having only a tax administration system is far from sufficient; clear regulations, investor protection mechanisms, and industry standards for new assets and services are also necessary. Policymakers need to assess the capacity of the tax authority and the maturity of the market where taxation is to be implemented. Second, standards that can be implemented should be established to verify the operational feasibility of the tax system. The assessment should focus on the system's ability to link transaction data and compute profits and losses, while ensuring that taxpayers can correct reporting errors. This should rely on actual implementation testing to evaluate readiness, rather than simply depending on a fixed timeline or the launch of IT systems. Third, simulation tax filing and pilot testing that align with real trading scenarios should be conducted. The testing scope should not only include simple domestic CEX transactions but should also cover overseas CEXs, personal wallets, and DEXs. Before formal taxation, it is vital to identify issues such as missing transaction data, holding cost recognition, and frequent reporting errors.
Policymakers also need to consider public acceptance. The survey found that a large number of respondents are concerned that taxation will limit wealth accumulation opportunities for young people, with those in their 20s and 30s feeling particularly strongly; individuals of all ages are questioning the fairness of crypto taxation compared to other financial assets. Relying solely on the completeness of the technical level is far from enough; investors also need to recognize the fairness of the tax burden and rules.
The debate on the 2027 crypto tax should not be limited to whether to maintain the original implementation date. Policymakers need to evaluate whether taxable gains and losses can be accurately assessed in real trading scenarios, whether tax authorities can obtain the necessary transaction data, whether market rules and investor protection are in place, and whether investors recognize the fairness of the tax standards. If a hasty implementation occurs without sufficient preparation, both the competitiveness of the domestic market and the capability to manage the tax base will be harmed.
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