South Korea Tightens Crypto Rules, Delays 20% Tax to 2027

South Korea, a leading hub for cryptocurrency, is actively shaping a robust regulatory framework for the digital asset industry. The nation is committed to enhancing transparency and security within its digital economy by tightening existing rules in 2025.

On June 1, 2025, the Financial Service Commission (FSC) permitted nonprofits with over five years of operational experience and verified by external audits to sell donated digital assets. This move includes a 10% daily sales cap and prohibits selling through the exchange’s own platform. Additionally, virtual asset exchanges can now liquidate user fees into crypto, providing more operational flexibility. Nonprofits are required to form an internal review committee to evaluate the suitability of donations and ensure transparency.

On May 20, 2025, the FSC implemented stricter anti-money laundering (AML) compliance in crypto trading. Public companies and professional investors are now mandated to adhere to AML obligations while trading. Banks are required to follow Know Your Customer (KYC) procedures, aiming to create a secure and stable environment for crypto activities.

On the same day, the FSC finalized new crypto regulations impacting non-profits, exchanges, and certain tokens. These regulations categorize specific tokens as risky and limit their operations. Nonprofits are restricted from selling crypto assets unless they are listed on major exchanges.

In March 2025, the Financial Intelligence Unit (FIU) collaborated with Apple to block unauthorized crypto platforms. Google Play removed 17 unlicensed trading platform apps in South Korea, further tightening control over the crypto market.

On March 5, 2025, the FSC reconsidered legal pathways to allow Bitcoin ETFs, noting Japan’s evolving regulatory approach as a potential model.

In February 2025, the FSC allowed non-profit organizations, such as charities and universities, to open real-name verified accounts on cryptocurrency exchanges. This move aims to improve accountability by tying crypto trades to real account name bank accounts. Additionally, a pilot program was introduced to allow 3,500 corporations and professional investors to trade on digital platforms, set to commence in the third quarter of 2025.

From January 1, 2025, to January 1, 2027, a 20% crypto tax introduced by lawmakers was delayed to 2027.

The Financial Supervisory Service (FSS) of South Korea, operating under the FSC, is prioritizing stricter crypto regulations to inspect illegal activities and take strict action against them. The FSS is also focusing on overseeing AML obligations among investors and platforms trading crypto. The FSC is developing a second phase of crypto regulations focusing on service provider compliance.

Crypto platforms like Bithumb, Flybit, and GDAC exchange have been officially registered under the FIU, making them country-licensed to operate crypto trading. Virtual Asset Service Providers (VASP) are required to operate digital trading in South Korea. Crypto exchange platforms are required to obtain certification from the Korea Internet Security Agency (KISA) for Information Security Management System (ISMS). This approach was introduced with the real-name accounts verification approach in 2025.

The new implementation to impose a 20% capital tax on crypto gains is delayed to 2027, and there is no alternate crypto tax in South Korea as of 2025. Crypto is not classified as legal tender in South Korea; however, crypto exchanges are legal and are governed by federal law in the region. Since crypto is not considered a national currency or a financial asset, it remains tax-free in South Korea.

In 2025, the penetration rate of cryptocurrency users in South Korea is approximately 22.48%, which is expected to increase by 23.85 million by 2026. It is expected that the crypto adoption will reach 12.31 million by 2026. The current crypto market revenue in South Korea is US$1.1 billion, which is expected to reach up to US$1.3 billion by 2026. The current crypto market is growing at a rate of 12.15% from 2025 to 2026. The South Korean government is yet to disclose its crypto holdings; policies focus on building a safe crypto environment for investors and consumers. In March, South Korea’s Ethics Commission for government officials reported that 20% of public officials hold crypto assets.

In 2025, South Korea proved to be one of the most active crypto markets in the world, with its smart steps to enhance user safety. It established transparency in digital finance and created a better version of crypto regulations for the users. With the new crypto-friendly president, Lee Jae-myung, South Korea continues to thrive in the digital assets landscape.