South Korea is pushing a consolidated digital asset law, fighting over a crypto tax repeal, and moving its central bank digital currency tests into a new phase, all at the same time.
- One rulebook: the FSC and ruling Democratic Party are drafting a Digital Asset Basic Act
- Tax battle: lawmakers are still split over the planned 22% crypto income tax
- CBDC push: the Bank of Korea is advancing Phase 2 testing with banks and deposit tokens
South Korea is trying to turn a messy patchwork of crypto policy into something closer to a real framework. The Financial Services Commission (FSC) is preparing a consolidated Digital Asset Basic Act with the ruling Democratic Party. It is meant to cover stablecoin issuance and circulation, digital asset business rules, exchange entry requirements, disclosures, internal controls, and system-resilience standards.
That is the government saying, in plain English: if digital assets want to operate like a serious financial market, they will be treated like one. No more pretending exchanges, stablecoins, and compliance live in separate little bubbles. They are part of the same machine, and when one gear breaks, everybody feels it.
There are still ten separate digital asset and stablecoin bills sitting in Parliament, which tells you how unfinished this all still is. The second-stage digital currency legislation has also been slowed by the same old arguments: should banks primarily control won-denominated stablecoin issuers, and should major exchanges face ownership restrictions?
Those fights matter because stablecoins are not just another token class. They are the grease in crypto markets, the settlement layer for a lot of trading, and increasingly a payments tool. Whoever controls issuance and circulation gets a lot more influence than a shiny ticker suggests.
The crypto tax fight is still alive
While regulators work on a broader rulebook, the tax fight is nowhere near over. South Korea’s National Assembly Finance and Economic Planning Committee is scheduled to review an opposition bill that would abolish the country’s digital currency income tax.
Deputy Prime Minister and Finance Minister Koo Yun-Cheol said the government still plans to move ahead with taxation of digital currency income next year. Under the current plan, gains above KRW 2.5 million ($1, 700) a year would be taxed starting January 1, 2027, at a rate of 20% national tax plus 2% local income tax, according to Koo.
That matters because the shorthand “22% tax” can sound broader than it is. The tax is aimed at annual digital asset gains above the exemption threshold, not every trade or every wallet movement. In crypto, the devil is always hiding in the definition of “income, ” usually wearing a tie and carrying a calculator.
Koo also said losses from digital currency investments in stocks will not qualify as digital currency losses for tax deductions. The Finance Ministry has said the tax will proceed after several delays.
The repeal push is being led by opposition lawmakers, who argue that taxing digital currency while stock investors remain exempt is unfair. That is a politically sharp argument, and it is not hard to see why it lands. Once a government singles out one asset class for the tax knife, people start asking whether this is principled policy or just easy revenue.
A repeal petition backed by 50, 000 individuals is expected to be presented to a petitions subcommittee. No subcommittee has been fully constituted yet, and no review dates have been set.
People Power Party lawmaker Song Eon-seok introduced an amendment to the Income Tax Act on March 19 that would remove the provision taxing income generated from the transfer and lending of digital currencies.
South Korea wants regulation and innovation at the same time
The bigger picture is pretty clear: South Korea is not trying to kill crypto. It is trying to domesticate it.
The planned Digital Asset Basic Act would pull together a patchwork of separate proposals into one broader framework. That is the sensible part. Stablecoins, exchanges, disclosures, internal controls, and operating standards all belong in one legal architecture if the goal is to stop market chaos instead of just chasing it after the fact.
One of the more important policy details is the treatment of stablecoin reserves and issuer failure. According to Compliance Corylated, the draft law includes bankruptcy remoteness rules, meaning reserves backing stablecoins should be kept separate and protected if an issuer goes bust. The same reporting says the minimum equity capital requirement could be KRW 500 million, down from an earlier KRW 6 billion proposal.
That is the sort of boring but crucial detail that separates real policy from crypto theater. If a stablecoin is supposed to act like money, then the backing should not vanish into corporate insolvency the minute things get ugly. Users do not need more “trust me, bro” finance with a nicer logo.
The Bank of Korea is pushing ahead with CBDC testing
South Korea’s central bank is also moving its digital money work forward. The Bank of Korea announced it is launching Phase 2 of its CBDC testing, with nine banks participating and a user cap of over 500, 000 for live deposit token testing. If system development and participant recruitment are ready, the next stage could begin as early as September.
For readers not steeped in the jargon: a CBDC, or central bank digital currency, is a digital form of sovereign money issued by a central bank. Deposit tokens and tokenized deposits are closely related ideas, digital representations of bank deposits used in a programmable payment system.
A Bank of Korea official, as quoted by Yonhap News, said:
“The Bank of Korea will provide the infrastructure for the institutional CBDC, and each bank will conduct its own business with deposit tokens. [Adding] from the second phase, we will lay the groundwork for commercialization, ”
“Commercialization” is doing a lot of work there. It means the central bank is trying to move this beyond a lab exercise and into something that could actually be used in a real financial setting.
New governor Shin Hyun-song began his four-year term by naming CBDCs and tokenized deposits among four priorities. He said the aim is to internationalize the won and innovate the currency regime.
“safeguarding trust in money and the stability of payments and settlements is also the Central Bank’s mission of the era.”
“Through Phase two of Project Han River, we will increase the usability of CBDC and deposit tokens, and through international cooperation such as the Agorá Project, we will enhance the won’s standing even in a digital payments environment.”
That is the central bank version of digital finance, modern rails, but still under tight control. If you are waiting for the Bank of Korea to suddenly embrace permissionless chaos and meme-driven money, you will be waiting a while.
The broader international backdrop helps explain why this matters. The BIS-led Project Agorá: Central Banks and Banking Sector Explore is a real cross-border effort exploring how tokenized wholesale central bank money and commercial bank deposits can improve the speed, cost, and integrity of international payments while preserving the two-tier monetary system. In other words, this is not just local experimentation for the sake of sounding advanced at a conference.
What South Korea is really building
South Korea is trying to do three things at once: write a serious digital asset law, tax crypto gains like a real asset class, and modernize payment infrastructure with CBDC-style testing.
That combination says a lot. The country wants the benefits of digital finance, speed, programmability, competitiveness, without the scams, the sloppy oversight, and the “trust the vibes” market behavior that has blown up so many users elsewhere.
There is nothing wrong with that instinct. The hard part is execution. If stablecoin rules become a closed shop for banks and incumbents, the system may be safer but also narrower and less innovative. If the tax regime feels unfair, the political backlash will keep simmering. And if CBDC testing turns into surveillance with a cleaner interface, people will notice.
South Korea is not choosing between crypto freedom and financial control. It is trying to force digital assets into a regulated box while also building new digital money rails of its own. Whether that ends up as a model for other countries or just a more bureaucratic version of the same old financial system will depend on how much room lawmakers leave for innovation before the compliance machine eats it alive.
Key questions and takeaways
-
Why is South Korea drafting a new digital asset law?
The FSC and ruling Democratic Party want one consolidated framework instead of a pile of separate bills. The goal is to regulate stablecoins, exchanges, disclosures, internal controls, and operating standards under a single rulebook. -
What is still unresolved in the stablecoin debate?
The big argument is who should control won-denominated stablecoin issuers and whether major exchanges should face ownership restrictions. That is really a fight over who controls the rails. -
When would South Korea’s crypto tax start?
The current plan is for January 1, 2027. Gains above KRW 2.5 million a year would be taxed at 20% national tax plus 2% local income tax. -
Is the crypto tax guaranteed to survive?
No. Opposition lawmakers are trying to repeal it, and a petition backed by 50, 000 individuals is moving through the process. The fight is still active. -
Why is the Bank of Korea testing CBDCs and deposit tokens?
The central bank wants to modernize payments, improve settlement systems, and explore digital money formats that keep monetary control inside the existing financial system. Phase 2 is meant to lay the groundwork for commercialization. -
Why does Project Agorá matter?
It shows South Korea’s CBDC work is part of a wider BIS-led push to test tokenized money for cross-border payments. This is not just a local pilot; it is part of a broader institutional experiment.
Further reading
A few related South Korea policy angles worth keeping on the radar:
- South Korea advances crypto bill, tax fight continues
- South Korea’s proposed stablecoin rules emphasise bankruptcy protection
- South Korea Plans Consolidated Digital Asset Bill as Tax Debate Continues
- South Korea Digital Assets Market overview
- Legality of cryptocurrency by country or territory
- South Korea CBDC 'Project Hangang' phase 2 targets 500k users
- South Korea Finalizes 2027 Crypto Tax Plan as CARF Tightens
- South Korea Crypto Tax Revolt Hits 52, 900 Signatures
