South Korea Expands Crypto Tax Net: Key Changes in 2025 Under Lee Jae-Myung’s Administration

• How Is South Korea Broadening Crypto Taxation?
• Why Is South Korea Lifting Crypto Venture Restrictions?
• What Does This Mean for Crypto Businesses?
• FAQ: South Korea’s 2025 Crypto Policy Shift

South Korea is tightening its crypto tax regulations while lifting restrictions on blockchain ventures, marking a pivotal shift in its digital asset policy. The National Tax Service now requires income reporting for crypto earned from foreign firms, even outside traditional corporate structures. Simultaneously, the SME Ministry proposes removing crypto trading and brokerage from its "restricted industries" list, unlocking fiscal benefits for innovators. These changes reflect growing institutional trust in crypto, fueled by the 2024 VIRTUAL Asset User Protection Act. Here’s a deep dive into the reforms reshaping Korea’s crypto landscape.

How Is South Korea Broadening Crypto Taxation?

On July 9, 2025, South Korea’s National Tax Service (NTS) issued a landmark clarification: workers receiving virtual assets as payment from foreign companies must declare them as comprehensive income, regardless of corporate frameworks. This closes a loophole where crypto salaries from overseas entities often escaped taxation.

Consider these scenarios illustrating the new rule:

• Case 1: A Seoul-based developer signs a direct contract with Singapore’s Corporation B (a subsidiary of Japan’s Corporation A) and receives Bitcoin for coding work. Despite no involvement from Corporation B’s Korean affiliate, the NTS deems this taxable under Income Tax Act Articles 70 and 127.
• Case 2: A freelance designer paid in Ethereum by a Swiss DAO must now report earnings, whereas previously such income fell into a gray zone.
• Case 3: Crypto earned through decentralized platforms like Gitcoin could face scrutiny if recipients are Korean residents.

Analysts from TradingView note this aligns with global trends, citing similar moves by the IRS (2023) and Germany’s BaFin (2024). The NTS emphasized compliance via withholding obligations, warning that non-reporting may trigger audits.

Why Is South Korea Lifting Crypto Venture Restrictions?

Parallel to tax reforms, the Ministry of SMEs and Startups proposed delisting blockchain-based crypto trading and brokerage from its "restricted industries" classification. Originally barred from tax incentives and public funding, these sectors now gain equal footing with other tech ventures under Lee Jae-Myung’s administration.

Key drivers behind this shift:

• Regulatory Maturity: The 2024 Virtual Asset User Protection Act established custody rules, KYC mandates, and dispute resolution mechanisms.
• Market Growth: Korea’s crypto trading volume surged 210% YoY in Q2 2025 (CoinGlass data), outpacing traditional assets.
• Innovation Potential: Projects like Klaytn’s CBDC pilot demonstrated blockchain’s utility beyond speculation.

“This isn’t deregulation—it’s smart regulation,” remarked a BTCC analyst. “By removing outdated barriers, Korea positions itself as Asia’s Web3 hub while maintaining consumer safeguards.”

What Does This Mean for Crypto Businesses?

The policy dualism—stricter taxes but friendlier venture policies—creates both challenges and opportunities:

Notably, exchanges like BTCC may benefit from increased institutional participation, though the NTS’s strict stance could deter some foreign projects. “It’s a trade-off between transparency and flexibility,” noted a CoinDesk Korea report.

FAQ: South Korea’s 2025 Crypto Policy Shift

When do the new tax rules take effect?

The NTS clarification applies immediately to all virtual asset income earned from July 9, 2025 onward.

Which crypto activities remain restricted?

Privacy coin trading and unlicensed ICOs stay prohibited under existing financial laws.

How does this affect decentralized platforms?

The NTS hasn’t issued DAO-specific guidance, but wallet-linked tax reporting is likely.