Key Takeaways
- • A Tiger Research survey of 2,423 South Korean virtual asset investors projects annual trading volume at the country's three largest exchanges (Upbit, Bithumb, Coinone) will decline approximately 30%, from 859.8 trillion won ($636.4 billion) to 601.9 trillion won ($445.5 billion), if taxation takes effect as scheduled in January 2027.
- • Approximately 258 trillion won ($191.0 billion) in annual trading volume could evaporate from South Korea's major exchanges due to investor migration, with 73.1% of survey respondents indicating they will reduce domestic exchange usage once taxation begins.
- • Survey respondents demonstrate clear substitution behavior: 68.1% intend to increase overseas exchange usage, 64.2% plan to expand personal wallet and peer-to-peer transactions, and 69.7% may reduce or halt investment activity entirely.
- • The South Korean government has confirmed a 22% tax rate (including local income tax) on annual net gains exceeding 2.5 million won; however, 82.9% of investors oppose the current taxation plan or call for further delay, citing excessive burden and unfairness relative to stock taxation.
- • Support for taxation exists conditionally: 63.4% of respondents indicated they could support the system if improved, suggesting policymakers retain opportunity to redesign the framework and retain domestic trading activity.
Summary
South Korea faces a significant risk of domestic cryptocurrency trading volume collapse if virtual asset income taxation proceeds as scheduled in January 2027. According to a survey released September 23rd by Tiger Research, a Web3 research firm, the combined annual trading volume of South Korea's three largest exchanges—Upbit, Bithumb, and Coinone—is projected to fall roughly 30%, from approximately 859.8 trillion won (approximately $636.4 billion) to 601.9 trillion won (approximately $445.5 billion). This represents an evaporation of approximately 258 trillion won ($191.0 billion) in annual trading volume.
The projection stems directly from investor behavior revealed in the Tiger Research survey of 2,423 South Korean virtual asset investors. Nearly three-quarters of respondents (73.1%) stated they are likely to reduce their use of domestic exchanges once taxation takes effect. Substitution patterns are pronounced: 68.1% of investors indicated they may increase usage of overseas exchanges, while 64.2% expressed willingness to expand use of decentralized exchanges (DEX) or peer-to-peer transactions through personal wallets. Additionally, 69.7% of survey respondents said they may reduce or halt their investment activity altogether, suggesting taxation could depress overall market participation beyond simple geographic migration.
The South Korean government has confirmed a 22% tax rate, inclusive of local income tax, on annual net gains exceeding 2.5 million won. However, investor opposition to the taxation framework remains substantial. Some 82.9% of respondents either opposed the current taxation plan or called for a further delay, citing concerns about excessive tax burden, unfairness compared with stock taxation, and inadequate tax infrastructure. The lack of confidence in the system's design reflects structural concerns rather than opposition to taxation in principle.
Notably, the survey reveals a conditional acceptance of taxation among the investor base. A significant 63.4% of respondents stated they could support taxation if the system were improved, indicating that policymakers retain an opportunity to redesign the framework to improve compliance and retention of domestic trading activity. This finding suggests that architectural modifications—addressing burden levels, comparative fairness, and infrastructure adequacy—could materially alter investor migration intentions and preserve a substantial portion of South Korea's domestic trading volume.
The projection stems directly from investor behavior revealed in the Tiger Research survey of 2,423 South Korean virtual asset investors. Nearly three-quarters of respondents (73.1%) stated they are likely to reduce their use of domestic exchanges once taxation takes effect. Substitution patterns are pronounced: 68.1% of investors indicated they may increase usage of overseas exchanges, while 64.2% expressed willingness to expand use of decentralized exchanges (DEX) or peer-to-peer transactions through personal wallets. Additionally, 69.7% of survey respondents said they may reduce or halt their investment activity altogether, suggesting taxation could depress overall market participation beyond simple geographic migration.
The South Korean government has confirmed a 22% tax rate, inclusive of local income tax, on annual net gains exceeding 2.5 million won. However, investor opposition to the taxation framework remains substantial. Some 82.9% of respondents either opposed the current taxation plan or called for a further delay, citing concerns about excessive tax burden, unfairness compared with stock taxation, and inadequate tax infrastructure. The lack of confidence in the system's design reflects structural concerns rather than opposition to taxation in principle.
Notably, the survey reveals a conditional acceptance of taxation among the investor base. A significant 63.4% of respondents stated they could support taxation if the system were improved, indicating that policymakers retain an opportunity to redesign the framework to improve compliance and retention of domestic trading activity. This finding suggests that architectural modifications—addressing burden levels, comparative fairness, and infrastructure adequacy—could materially alter investor migration intentions and preserve a substantial portion of South Korea's domestic trading volume.
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