The South Korean government is closing loopholes in its tax laws and revising certain restrictions so its cryptocurrency sector can continue to develop. With the elevation of cryptocurrency status since Lee Jae-myung won the South Korean election , the government, individuals, and businesses have had to adapt and modify existing rules and traditional systems to maintain compliance and accountability. South Korea expands crypto tax net On July 9, 2025, South Korea’s National Tax Service (NTS) clarified that residents must report comprehensive income tax on virtual assets received from foreign corporations in return for labor, even if their income is paid outside of traditional corporate structures. According to the NTS’s illustration, the employee in question signed a direct incentive contract with Corporation B, based in Singapore and a subsidiary of Corporation A in Japan. The virtual assets were then issued as compensation for work carried out under Corporation B’s direction, without any involvement from Corporation C, which is the Korean affiliate of the company group. The National Tax Service determined that the virtual assets fall under the country’s Income Tax Act, specifically Article 127 (withholding obligation) and Article 70 (final declaration of tax standard). Lee Jae-Myung’s administration lifts crypto venture restrictions On the same day, South Korea’s Ministry of SMEs and Startups published a legislative notice proposing a partial amendment to the Enforcement Decree of the Special Act on the Development of Venture Enterprises. South Korean venture policy originally categorized businesses involved in virtual asset trading and brokerage as restricted industries, which disqualifies them from tax breaks, financing, public procurement preferences, and other benefits afforded to certified venture companies. The logic behind the restriction was based on concerns about market volatility, lack of regulation, and user protection. However, with the Virtual Asset User Protection Act enforced in 2024, a wider legal infrastructure exists for the digital asset market. Therefore, authorities now argue that it is inappropriate to continue restricting such companies. The proposed amendment would remove ”virtual asset-related industries,” which include blockchain-based crypto asset trading and brokerage, from the list of restricted venture sectors. It will open venture status to new technology-based virtual asset companies that demonstrate innovation and business potential, and allow existing venture companies to pursue virtual asset-related projects without the threat of losing certification. In its public notice, the ministry stated that the revision reflects “the improving public perception of the digital asset industry” and acknowledges “the emerging legal and institutional safeguards for user protection.” “It is now necessary to lift outdated restrictions to promote consistency in policy and support future growth,” the notice read. KEY Difference Wire helps crypto brands break through and dominate headlines fast
