Author: Ekko An, Jay Jo, Tiger Research Compiled by: Luffy, Foresight News South Korea will officially tax crypto asset gains in January 2027 after three delays. With just over 3 months left until the effective date, relevant discussions continue to rise. A related petition to Congress has been supported by more than 50,000 people. As the debate resumes, the discussion should not just stay at the level of support or opposition, but also need to examine whether the current taxation plan is consistent with the real trading scenario of crypto assets. Taxing crypto investment income is one thing in itself, but whether the current plan can be implemented is another. Crypto assets will flow between local exchanges, overseas exchanges, personal wallets and decentralized exchanges (DEX), and investors often exchange between different crypto assets. If you want this tax system to operate normally, you must open up fragmented transaction records and use unified rules to calculate position costs and actual profits and losses. The problem is that if this supporting system is not fully established, both investors and the tax authorities will bear the burden. Investors need to verify and prove transaction records and holding costs on their own, and it is difficult for tax authorities to accurately identify taxable income and tax base. Therefore, the core issue is not only whether to tax, but whether investors can accurately calculate profits and losses, complete tax returns, and whether transaction records can be effectively traced under real trading scenarios. For this reason, the current discussion cannot be limited to being in favor or against taxation. It also needs to evaluate whether the current plan is in line with the actual trading situation, what investors’ concerns are, and how the taxation will change trading behavior and the local market structure. How South Korean Crypto Investors View Cryptocurrency Taxes Tiger Research teamed up with the Korean polling agency PMI to conduct a survey of 2,423 Korean crypto investors. The questionnaire covered tax attitudes, implementation time, rationality of the current plan, completeness of the tax declaration and payment system, and expected changes in investor trading behavior after the implementation of the tax. Age breakdown of South Korean crypto tax opponents Opposition to crypto taxation emerged across all age groups, with 73.7% of respondents overall opposed. The opposition rates among those in their 20s, 30s and 40s all exceeded 75%; the opposition rates among those aged 50, 60 and above were 61.5% and 63.9% respectively. Resistance is strongest among those aged 20 to 40, but opposition is not limited to young investors. South Korean crypto investors are not entirely against taxation Simply supporting or opposing is not enough to fully reflect an investor’s perspective. Of those who opposed the tax, 51.5% said they would accept it if problems with the current scheme were properly addressed. At the same time, 74.5% of those who agreed that crypto assets should be taxed believed that the current plan should be delayed or modified, rather than implemented as is. The survey results show that many investors can distinguish between "crypto assets should be taxed" and "whether the current taxation plan is feasible." Some investors who oppose taxation say they can accept it after the system is improved; many people who agree with the principle of taxation do not support the direct implementation of the existing plan. This divergence will become more apparent as investors evaluate specific rules versus system readiness. Key investor concerns about current taxation plan Percentage of Korean investors’ concerns about crypto taxes The detailed results of the survey reveal the reasons why investors distinguish between "taxation itself" and "taxation plans". Their concerns focus on three major directions: Whether tax rates and deductions are appropriate and fair compared with other financial assets Does the system correctly take into account losses and acquisition costs when calculating taxable gains? Is the system ready to support tax filing and payment, transaction tracking, and investor protection? Investors are not only concerned about whether crypto assets should be taxed, but also about the level of the tax burden, how taxable income is calculated, and whether the entire plan can be implemented. The following chapters explore these three questions. Is the tax burden fair? If South Korea’s crypto tax is implemented, expected changes in the trading behavior of investors of different age groups Most respondents have a negative view of the tax burden of the current scheme. Of all respondents, 73.5% thought the 22% tax rate was too high and 65.2% thought the basic deduction of about $1,800 per year was too low. Another 72.1% believe that tax rules for crypto assets are unfair compared to other financial assets. Proportion of people who oppose crypto tax or support delaying its implementation by income Low-income investors also expressed strong concerns. Respondents with a monthly income of less than approximately US$2,100 accounted for 24.9% of the total sample. 87.9% of this group opposed the implementation of the current plan and requested another extension, which was higher than the average of 82.9% of all respondents. This shows that concerns about the current scheme are not unique to high-income investors. 70% of investors believe that crypto tax will prevent young people from accumulating wealth Respondents also worried that policies would limit young people’s wealth accumulation. Overall, 73.0% of respondents believe cryptocurrency taxes could limit wealth-building opportunities for people in their 20s and 30s. The 20-year-old group has the highest level of concern at 78.7%, followed by the 30-year-old group at 77.2%. Support for this view also topped 65% among all other age groups. The survey shows that investors are not only concerned about tax rates and deductions, but also judge the fairness of the rules by comparing them with other financial assets. Low-income groups are also sensitive to this, and all age groups are concerned about the impact of policies on young investors. Investors also consider the size of the tax burden and the differential impact of the policy on different groups of people. Can taxable earnings be accurately calculated? Investor concerns over core provisions of current crypto tax framework To accurately calculate taxable income, the tax system must be able to account for investors' true profits and losses, and establish clear rules for losses, holding costs, and various types of crypto income. The survey found that investors have strong concerns in these three aspects. First, 65.9% of the respondents believe that the current loss handling rules are unreasonable. Current rules allow investors to use crypto asset losses to offset profits within the same year, but losses cannot be carried forward to subsequent years to offset future profits. Crypto investors’ profits and losses often span multiple years, and loss deduction rules will directly affect the accuracy of accounting for taxable income. Investors' concerns about holding costs and transaction record traceability are even more prominent: 70.6% of respondents worry that they need to rely on their own transaction records and holding costs to calculate and declare profits and losses by themselves, which is an overburden. Crypto assets can be transferred between domestic and overseas CEX and personal wallets in South Korea, and investors often exchange different currencies. The more complex the transaction path is, the more difficult it is for investors to match the original position cost with subsequent transactions. Crypto revenue sources are very diverse, including trading, lending, staking mining, airdrops, liquidity mining, etc. The current tax framework mainly covers income generated from asset transfers and loans. Which income needs to be taxed and when to pay tax need to be further clarified. About 65% of respondents believe that the existing framework cannot fully cover various transaction scenarios. In summary, investors are not only concerned about tax rates, but also include loss processing, determination of holding costs, and the definition of different types of income. These rules ultimately determine whether taxable income from crypto assets can be accurately calculated based on true profits and losses. Are supporting systems ready? Investors are concerned about preparations for the implementation of crypto tax implementation A tax system not only requires clear rules, but also needs administrative and IT systems to support its implementation. In the survey, 66.4% of the respondents believed that the Korean government was not fully prepared; 65.7% said that it was difficult to fully track and collect taxes across local CEX, overseas CEX and personal wallets; 68.8% believed that investors were burdened with tax filing and payment. Investors not only pay attention to the legal provisions, but also care about whether the plan can be implemented at the practical level. Cryptoasset trading can be conducted off Korea’s local CEX. Once investors use overseas CEX or personal wallets, transaction data will be scattered across multiple channels and difficult to collect for taxation. Reliable transaction tracking and investor reporting burdens are all issues that need to be considered. In addition to administrative and IT preparations, 85.1% of respondents believed that an investor protection framework must be established before the tax can be implemented. Taxation will create new tax obligations for investors. In addition to tax collection and administration, market protection mechanisms are also necessary for implementation. Respondents’ views on the implementation of crypto tax in 2027 The survey results on landing time further confirm this concern. 82.9% of the respondents opposed the implementation of the current plan as scheduled or requested an extension, and 75.2% believed that it would be too early to implement it in 2027. The questionnaire went on to ask 1,823 respondents who chose to postpone their landing: What should they do if the rules and supporting preparations are not completed by the scheduled time. Of these, 93.4% believe the tax should be postponed again until systems are ready. For investors, the key is not simply to postpone it for a few years, but whether the basic conditions for implementation are truly in place, including tax collection and management, transaction data management, reporting systems and investor protection. Potential impact on the Korean market The scale of fund flows from Korean exchanges to overseas exchanges Investors’ attitude towards the taxation plan indicates that trading behavior may change after the implementation of the policy. A large amount of Korean crypto funds have already flowed overseas. According to a previous report by Tiger Research, approximately 700 trillion won (approximately US$490 billion) will flow overseas from 2021 to the first half of 2026. Investors have generally used trading channels other than local CEX, including overseas exchanges and personal wallets. This survey evaluates the changes in investment scale and transaction channels after the implementation of taxation. The results show that investors may scale back their investments, reduce their use of local CEX, and turn to other trading channels. If expectations are translated into actual behavior, it will weaken the trading platform of the Korean crypto market and make it more difficult for the tax department to track taxable activities and market supervision. Impact on local CEX and even the entire Korean crypto industry Research predicts that taxation will reduce the willingness to invest in crypto and reduce the use of local CEX. 69.7% of the respondents said they would reduce or even stop crypto investments, and 73.1% said they would reduce the use of South Korea’s local CEX. This will reduce the total amount of funds in the crypto market and also reduce the trading volume of local exchanges. 66.4% of respondents believe the tax will have a negative impact on the Korean crypto market. If investors reduce their exposure to crypto assets and switch to other financial assets, trading volume and liquidity in the local market will decline. Trading volume and revenue of South Korea’s top three crypto exchanges (Upbit, Bithumb, Coinone) Tiger Research combined the data from this survey and the changes in trading volume in other countries that have implemented crypto taxes to estimate the changes in trading volume and revenue of leading exchanges. Estimates show that the full-year trading volume of South Korea's three major exchanges, Upbit, Bithumb, and Coinone, may drop from approximately US$601 billion in 2026 to US$421 billion in 2027, a decrease of approximately US$180 billion, or 30%. During the same period, the revenue of the three exchanges is expected to drop from US$722 million to US$509 million, a decrease of US$213 million, or 29.5%. Shrinking trading will also affect the overall tax revenue of the crypto industry. The decline in handling fees will lead to a reduction in value-added tax revenue, and the decline in exchange profits will reduce corporate income tax. Taxation of crypto income could have created new tax sources, but the contraction of the local market will simultaneously squeeze the original tax revenue and weaken the overall revenue-increasing effect of the new tax. The shrinking liquidity and user scale of local CEX will also hit the foundation of supporting financial services such as custody and prime brokerage. Transactions shift to offshore channels, CARF framework has limitations Korean investors’ use of global centralized exchanges (CEX) and decentralized exchanges (DEX) After the tax is implemented, if investors reduce local CEX transactions, some funds will flow to overseas CEX and personal wallets. Among investors who plan to reduce the use of local exchanges, 88.0% said they may increase the use of overseas CEX or self-hosted wallets; among all respondents, 60.0% have already used overseas CEX and 33.3% have used DEX. Investors’ expected shift in trading channels by age Young investors are most willing to turn to offshore channels. Among 20-year-old respondents, 76.8% said they would use overseas CEX more after the tax was implemented, and 73.2% would increase DEX and personal wallet P2P transactions. Investors who already use overseas exchanges and on-chain services can more easily transfer transactions out of the local platform. As more transactions flow out of local service providers, it becomes more difficult for tax authorities to obtain complete transaction information. The Crypto Asset Reporting Framework CARF can alleviate this gap: it requires crypto service providers to report user and transaction information, and relevant data can be exchanged between national tax authorities. However, the time for countries to start CARF data exchange is not uniform: South Korea plans to start in 2027; Hong Kong, Singapore, and the United Arab Emirates plan to start in 2028; the United States will wait until 2029. The time difference will limit the acquisition of overseas transaction data in the initial stage of tax collection. Proportion of transactions not covered by CARF in different crypto tax jurisdictions At the same time, CARF cannot cover all transaction links. According to Chainalysis data, in 2025, 59.1% of Japan’s CEX outflow assets will flow to channels that cannot be covered by CARF; the proportion in the UK is 65.2%, the United States is 75.4%, and Italy is 76.6%. In Italy, the proportion rose from 50.4% in 2024 to 76.6% in 2025; assets transferred into personal wallets increased by 45.7% during the same period. The above data does not directly prove that taxation leads to capital outflows, but it shows that even in countries that have established crypto taxation and reporting systems, there are still large-scale transactions that cannot be fully tracked solely by reporting by service providers. This information gap also raises tax fairness issues. The tax authorities can easily verify local CEX transactions through service provider reporting; overseas CEX and personal wallet transactions rely more on investors' independent declaration and subsequent verification. Once investors believe that the regulatory tracking intensity of different trading channels is significantly different, it will further prompt transactions to be transferred to overseas CEX and DEX. Before the tax is implemented, the Korean government needs to clarify the rules related to position cost determination and information declaration; at the same time, it needs to establish a mechanism to verify the profits and losses generated by overseas CEX and personal wallet transactions. Rushing the tax will harm industry and tax revenue The core conflict is not whether to impose taxes, but whether South Korea should implement the current plan in 2027 when the supporting system is not yet in place. Current law provides that the crypto asset income tax will take effect in January 2027. This survey shows that investors can distinguish between taxation principles and current plans. Even those who agree that crypto should be taxed also believe that the rules need to be optimized; some opponents also say that taxation can be accepted after the system is improved. Policymakers must assess that taxation on the ground without adequate supporting preparations will bring market shocks. As analyzed above, local crypto investment and trading volume may decline, and trading activities will shift to overseas CEX and personal wallets. Such changes will weaken the trading infrastructure and industry competitiveness of South Korea's domestic market, while also fragmenting transaction data and making it more difficult for tax authorities to track the tax base. Creating new tax sources and stabilizing the management and control of the tax base are two independent problems. Policymakers should first assess whether this tax system can operate normally in a real market environment, rather than finalizing a date for implementation and then filling loopholes later. The survey shows that investors are more concerned about the readiness of the entire system than the specific year. Policymakers should first clarify the conditions for implementation and then determine the start time of tax collection. There are three aspects that need to be focused on. First, when assessing supporting preparations for taxation, the overall situation of market supervision should be considered simultaneously. A tax collection and administration system alone is not enough. The market also needs clear regulations, investor protection mechanisms, and industry standards for new assets and services. Policymakers need to assess both the collection and management capabilities of tax authorities and the maturity of the market in which taxation will be implemented. Second, formulate implementable evaluation standards to test the practical feasibility of the tax system. Evaluate whether the system can connect transaction data, calculate profits and losses, and ensure that taxpayers can correct reporting errors. Assess readiness based on actual implementation testing, rather than relying solely on a fixed timetable or IT system rollout. Third, carry out simulated tax returns and pilot tests that fit real transaction scenarios. The scope of testing should not only include simple local CEX transactions, but also cover overseas CEX, personal wallets, and DEX. Before formal tax collection, problems such as missing transaction data, determination of holding costs, and high-frequency reporting errors are discovered in advance. Policymakers also need to consider public acceptance. The survey found that a large number of respondents are worried that taxation will limit the wealth accumulation opportunities of young people, especially those in their 20s and 30s. All age groups question whether crypto taxation is fair compared to other financial assets. Technical perfection alone is not enough. Investors also need to recognize the fairness of tax burdens and rules. The debate over the 2027 crypto tax should not be limited to whether to maintain the original implementation time. Policymakers need to evaluate whether taxable profits and losses can be accurately calculated in real transaction scenarios, whether tax authorities can obtain necessary transaction data, whether market rules and investor protection are in place, and whether investors can recognize the fairness of tax standards. If it is implemented in a hurry without sufficient preparation, the local market competitiveness and tax base management capabilities will be damaged.