Will new crypto tax ‘ploy’ save this political party from an election wipeout?

No crypto tax.

That’s the core message of the People Power Party’s new bill. South Korea’s second biggest political party wants to scrap an incoming 22% government levy on crypto trading profits that is due to come into force on January 1, 2027.

However, sceptics say the bill amounts to little more than a desperate attempt to woo voters ahead of June’s crucial local elections.

“It’s very clearly a political ploy aimed at winning votes from young people, who are growing increasingly politically apathetic and — at the same time — keen on stock market and crypto investments,” a political correspondent at a major South Korean newspaper told DL News.

The journalist asked DL News to withhold their name.

The stakes are high. Crypto is huge in South Korea. In March last year, National Assembly data showed over 16 million residents held accounts on domestic crypto exchanges. That represents about a third of all voters — a potentially massive election windfall.

The PPP’s Floor Leader Song Eon-seog says more than 13 million South Korean citizens, or 25% of the population, trade crypto, Hanguk Kyungjae reported.

Funds leaking overseas

The PPP holds 107 seats out of 300 in the National Assembly. The party said it decided to scrap the crypto tax after meeting with the heads of the country’s leading crypto exchanges, South Korean newspaper Hanguk Kyungjae reported.

“If the government pushes ahead with crypto taxation under the current system, [...] funds could quickly move to overseas exchanges,” Park Soo-young, a PPP lawmaker, told reporters at a press conference. “This could lead to a contraction of the domestic market and capital outflow.”

But the PPP’s sudden concern with domestic crypto exchanges and the earnings of domestic investors rings hollow to crypto traders who spoke to DL News.

The bill has been rolled out just weeks before the country goes to the polls to elect local government councillors, mayors, and education chiefs. The PPP stands to lose control over scores of councils nationwide in the elections, opinion pollsters say.

The ruling Democratic Party won a landslide victory in last year’s presidential election, following PPP President Yoon Suk-yeol’s ill-fated attempt to declare martial law in December 2024.

The DP government is riding on a high, after the domestic stock market boomed to record-breaking levels early this year.

President Lee Jae-myung’s approval ratings have risen to 69%, with the PPP trailing the DP in several of the former’s heartland regions.

In political circles, concerns are growing over whether the PPP can even mount a viable challenge in June, wrote the South Korean newspaper Joongang Ilbo in an editorial.

This all makes the sudden interest in the crypto tax question more suspicious, South Korean voters told DL News. Both political parties have waded into the crypto tax debate before, usually ahead of key elections.

The DP has not ruled out countering the PPP’s move with a decision to align its stance with the opposition.

As the election approaches, voters expect more promises from both sides of the National Assembly.

“It’s very hard to take either party’s position on crypto tax seriously at this stage,” Kim Se-hyun, a Seoul-based crypto trader and office worker, told DL News.

“I fully expect another delay or amendment to the crypto tax law between now and the start of 2027. These parties must take us for suckers.”

‘Political football’

Lawmakers first agreed to a crypto tax postponement in 2020, shortly after the April 2020 legislative elections. Both parties made sweeping crypto tax promises going into the election.

They agreed to a second postponement in the wake of the March 2022 elections, where crypto was a major campaign issue for both major candidates.

Their third and more recent postponement came on December 2, 2024, following April 2024’s legislative elections. Again, candidates made a host of crypto tax-related pledges going into the election.

The tax comprises a 20% flat fee and a 2% local tax levy and will apply to annual crypto trading-related profits of over $1,665. But sceptical South Korean crypto traders say they aren’t budgeting for paying it anytime soon.

“It’s a political football,” Kim said. “It won’t surprise me one bit if the parties decide to give it another kick before June. If that means we crypto traders don’t need to pay tax, long may this football game continue.”

Tim Alper is a News Correspondent at DL News. Got a tip? Email him at tdalper@dlnews.com.