A petition calling for the repeal of a proposed 22% tax on cryptocurrency investment gains in South Korea has officially surpassed 50,000 signatures, triggering a mandatory review by the Finance and Economic Planning Committee. Set to be implemented in January 2027, this tax has ignited significant backlash from investors who argue that it disproportionately burdens the crypto sector compared to other asset classes.
The petition, which now boasts over 52,000 signatures, highlights concerns that the impending tax will impose financial reporting burdens on investors, particularly targeting younger generations already struggling with high housing prices. Critics assert that the tax not only hampers economic mobility but also threatens to undermine South Korea’s competitive position within the global cryptocurrency market.
In a statement, the petition's authors warned, “If taxation is enforced to secure short-term revenues, it is likely to result in long-term losses through a contraction of the industry and the outflow of capital and talent abroad.” As one of the leading crypto hubs in the Asia-Pacific region, South Korea had witnessed a significant rise in cryptocurrency ownership; however, recent trends indicate a decline as prices have remained stagnant.
Data from local news agency Yonhap reveals that about 32% of South Koreans owned cryptocurrencies in early 2025. Yet, by February 2026, the total value of crypto assets held by South Koreans plummeted from approximately 121.8 trillion won (around $83.3 billion) to just 60.6 trillion won ($41.4 billion). This decline is mirrored by a steep fall in daily trading volumes across the nation's top five exchanges—from $11.6 billion in December 2024 to a meager $3 billion in February 2026.
Additionally, incoming regulations intended to tighten Anti-Money Laundering (AML) measures and enforce Know Your Customer (KYC) protocols have been criticized for making the investment landscape increasingly restrictive. Proposed rules by the Financial Services Commission (FSC) and the Financial Intelligence Unit (FIU) suggest that all crypto transactions exceeding 10 million won ($6,630) will be flagged as suspicious, further dissuading investor participation according to industry advocates.
As these regulations unfold, crypto industry representatives are vocal about the detrimental impacts of elevated compliance burdens on exchanges and investors alike. With the future of cryptocurrency regulation still uncertain, all eyes will be on how government officials respond to this growing discontent among South Korea's vital crypto community.
Source: Cointelegraph
