South Korea launches NABO study to shape 2027 cryptocurrency capital gains tax
South Korea’s National Assembly Budget Office (NABO) has begun a comprehensive study to inform implementation of a planned capital gains tax on digital assets due to take effect on January 1, 2027. The study examines three areas: comparative domestic and international regulatory frameworks; taxation issues tied to economic, technical and legal characteristics of digital assets (including blockchain-specific challenges such as pseudonymity and transaction finality); and standards for non-standard acquisitions and transactions (mining rewards, staking income, airdrops, hard forks and DeFi activities). The proposed tax rate is a combined 22% including local taxes. NABO will evaluate valuation timing, taxable events, reporting and enforcement mechanisms, and the practicality of requiring enhanced reporting from virtual asset service providers (VASPs), including thresholds, real-time monitoring and withholding. The office will also assess technical tools (blockchain analytics), legal amendments required across tax procedure and financial regulation, and interactions with international standards (FATF, OECD, EU MiCA). Analysts expect the study to consider likely market responses — potential shifts toward long-term holding, tax-loss harvesting, changes in trading frequency and institutional participation — and to estimate revenue impacts and behavioral elasticities. Successful implementation will hinge on coordination between tax authorities, regulators and technology providers; South Korea’s advanced digital infrastructure and high crypto adoption are cited as advantages. The NABO study is intended to produce actionable recommendations ahead of the 2027 deadline to reduce uncertainty and ensure enforceable, technology-neutral taxation rules.
Neutral
The NABO study increases policy clarity, which typically supports market stability by reducing regulatory uncertainty — a neutral to mildly bullish signal. However, the confirmed 22% capital gains rate represents a tangible tax burden that could dampen short-term retail trading activity and reduce turnover. Short-term effects: increased selling pressure from traders adjusting positions or realizing gains before implementation is possible, and higher volatility around guidance or draft legislation releases. Medium-to-long term effects: clearer rules and enhanced compliance/institutional reporting may raise institutional participation and reduce illegal activity, supporting liquidity and market maturation. Historical parallels: tax clarity in other markets (e.g., clearer reporting rules in the US and EU) often reduced uncertainty and encouraged institutional flows, while explicit tax hikes have sometimes suppressed retail trading volumes. Overall, the study itself is informational; until legislation details and enforcement mechanisms are finalized, the net market impact remains balanced between improved legal certainty (supportive) and a material tax rate (dampening).