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South Korea’s cryptocurrency industry is entering a politically sensitive stretch as investors, exchanges, and regulators confront a mix of tax uncertainty, shrinking trading volumes, and growing scrutiny over crypto-linked money laundering. At the center of the debate is the government’s plan to begin taxing crypto gains in January 2027 after three previous delays. Under the current plan, annual crypto profits exceeding 2.5 million won ($1,650) would be taxed at 22%. The framework was first formalized in 2020, but implementation was postponed several times amid concerns over investor protection, market readiness, and political resistance. According to the Hankyoreh newspaper, opposition has intensified after lawmakers scrapped the country’s financial investment income tax, which would have applied to gains from stocks and funds. Critics argue that taxing crypto while most retail stock investors remain exempt from capital gains tax creates an uneven playing field.Photo by Tara Winstead on PexelsCrypto tax petition advancesA public petition calling for the abolition of crypto taxation has already gathered more than 54,000 signatures, clearing the threshold for review by a National Assembly committee. The petitioner argued that the issue needs a full reconsideration, including the possibility of scrapping the tax altogether. The opposition People Power Party has also proposed legislation to abolish the crypto tax, saying it would be inconsistent to impose a separate income tax on crypto assets after eliminating the broader financial investment tax. The ruling Democratic Party, meanwhile, is expected to take up the issue more seriously after the June 3 local elections. The government says there has been no change to its position and that crypto taxation is still scheduled to begin next January. But it has ruled out, at least for now, any renewed discussion on the financial investment income tax, fueling claims that the tax system is treating crypto investors unfairly. The tax dispute comes as Korean crypto exchanges are already grappling with a steep drop in trading activity. Retail investors have been shifting money into equities, drawn by a strong KOSPI rally and momentum in chip and AI stocks, draining activity from the crypto market. According to CoinMarketCap data cited by ETNews, Upbit’s average daily trading volume in the first quarter stood at about $1.55 billion, down 38.8% from the second half of last year. Bithumb’s first-quarter daily average was roughly $647 million, a 44.4% drop over the same period. The decline continued after the first quarter. From Jan. 1 to May 20, Upbit’s average daily volume fell to about $1.38 billion, down 45.5% from the second half of 2025. Bithumb’s average dropped to about $600 million, widening its decline to 48.5%.That slowdown has hit earnings. Dunamu, the operator of Upbit, reported first-quarter operating revenue of 234.6 billion won and operating profit of 88 billion won ($58 million), down 55% and 78% year-on-year, respectively. Bithumb posted revenue of 82.5 billion won ($55 million) and operating profit of just 2.9 billion won ($2 million), down 57.6% and 95.8%, while swinging to a net loss of 86.9 billion won ($58 million). The structural problem is that Korean exchanges still rely heavily on retail spot-trading fees. Unlike major global exchanges, domestic platforms have limited room to expand into derivatives, institutional custody, stablecoin payments, and other higher-margin businesses. Rising compliance costs, including customer verification and anti-money-laundering (AML) upgrades, are adding to the burden. USDT dominates $77M laundering caseSeparately, Korean police said they apprehended 149 suspects accused of laundering about 117 billion won ($77.5 million) through a network linked to a China-based laundering group in Shenzhen, according to the Seoul Economic Daily. Seven suspects were formally arrested, and police said all suspects identified so far are Korean nationals. USDT accounted for 72% of the funds moved, while bogus gift-card operations made up 19% and ordinary bank transfers 9%. Authorities said the scheme used accounts opened under other people’s names and overseas crypto exchanges to make the funds harder to trace. Meanwhile, sentiment among Korean crypto investors remains mixed but not entirely bearish. A weekly survey by CoinNess and Kratos found that 34.1% of respondents expected Bitcoin to rise or surge this week, while 36.3% expected sideways movement and 29.6% expected a decline. Asked whether the crypto market could recover this year, 38.5% said the current downturn looked like a healthy correction with room for a rebound, while 29.7% said the market would not only recover but also set new highs. Combined, 68.2% of respondents expected some form of recovery this year. Still, pessimism remains. Another 17.7% said the crypto market had peaked and was unlikely to rebound, while 14.1% said they had already left the market and no longer had expectations. At the time of publication, Bitcoin (BTC) was trading at $76,677.43, up 0.1% over the past week, reflecting a largely range-bound market. 

Coinbase Affirms Commitment to India Despite Disabling Sign-UpsLeading US-based cryptocurrency exchange Coinbase announced on Monday that it has temporarily disabled new user sign-ups for its exchange platform in India.A report emerged via India’s English-language business daily The Economic Times on Monday which stated that Coinbase was stopping “all services” for Indian users.Photo by Big G Media on UnsplashClarification of a misunderstandingIt appears that Coinbase sent emails to a subset of its Indian customers, notifying them of the cessation of exchange operations in the country by September 25. However, a more recent report by TechCrunch outlined that Coinbase has provided further clarification that these emails were sent exclusively to customers who did not meet the updated standards set by the company.On that basis, these messages do not affect and are not relevant to the majority of Coinbase users in India. The email further advised affected users to transfer their funds from the platform by the specified date.A Coinbase spokesperson communicated to TechCrunch via email, stating:“We stopped allowing new user sign-ups on our exchange product in India back in June of this year. We maintain a robust tech hub in the country and offer live products, including our Coinbase Wallet. We are committed to India over the long term.”Coinbase’s proprietary exchange app in India reportedly boasts fewer than 50,000 monthly active users, as indicated by data from Sensor Tower, shared by an industry executive.Difficulty in cracking Indian marketDespite its aspirations, Coinbase has been unable to make headway with local authorities since launching its exchange in India over a year ago. The lack of progress with local officials has proven frustrating for company executives, including Durgesh Kaushik, who joined Coinbase last year as the Senior Director for Market Expansion, only to leave the company within a couple of months.Coinbase’s CEO, Brian Armstrong, made a visit to India last year to launch the exchange service by adding support for India’s popular payment instrument, the Unified Payments Interface (UPI). Unfortunately, the body overseeing UPI immediately denied Coinbase’s recognition, leading Coinbase to suspend support for the payment system shortly thereafter.UPI has proven to be a runaway success in India. Consequently, being able to access and integrate with it would be very important in providing Coinbase’s Indian customers with the means of on-ramping and off-ramping between the exchange and fiat currency. Coinbase affirmed its commitment to collaborating with the National Payments Corporation of India (NPCI) relative to UPI but these efforts simply have not borne fruit.RBI pushbackIn May of the same year, Armstrong disclosed that Coinbase had to halt its trading service in India due to “informal pressure” from the Reserve Bank of India (RBI), the nation’s central bank. Armstrong pointed out that cryptocurrency trading isn’t illegal in India — in fact, the country had recently imposed taxation on it. However, there were elements within the government, including the RBI, that appeared less enthusiastic about cryptocurrencies and were exerting “soft pressure” behind the scenes.Notably, other Indian cryptocurrency exchanges like CoinDCX and CoinSwitch remain operational, but they’ve had their own struggles in their own local market. In August CoinSwitch downsized its headcount, citing a 30% tax on crypto gains and a 1% tax deducted at source (TDS) on transactions as contributing factors. That same month, CoinDCX cut its headcount by 12%.

HSBC Expands Offering to Include Crypto ETFs in Hong KongThe Hong Kong and Shanghai Banking Corporation (HSBC), the largest bank in Hong Kong, has reportedly introduced its first cryptocurrency services for local customers.According to journalist Colin Wu’s tweet on Monday, HSBC now allows its customers to buy and sell Bitcoin-based exchange-traded funds (ETFs).Photo by Cheung Yin on UnsplashOffering three crypto ETFsHSBC’s cryptocurrency services specifically focus on the cryptocurrency ETFs listed on the Stock Exchange of Hong Kong. Currently, the exchange offers three crypto ETFs, including CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF, and Samsung Bitcoin Futures Active ETF.The introduction of these services will provide Hong Kong users with more exposure to cryptocurrencies. As of March 2022, HSBC Hong Kong had approximately 1.7 million active mobile customers, with about 95% of all retail transactions processed online. Plenty of the customers that currently access TradFi financial services don’t touch crypto-native products. Bridging this gap and bringing crypto to a more traditional financial services client base is a major step towards mass market adoption of crypto.Educating the marketIn addition to the roll-out of cryptocurrency services, HSBC reportedly launched the Virtual Asset Investor Education Center. The initiative is designed to protect investors from cryptocurrency-related risks by requiring them to read and confirm educational materials and risk disclosures before investing.The Virtual Asset Investor Education Center is accessible through HSBC’s virtual asset-related products, such as the HSBC HK Easy Invest app, HSBC HK Mobile Banking app, and online banking.This is also a significant step forward. It’s entirely valid that while there are good actors in the crypto space, the sector has also had a lot of sharp practice that reflects badly on it. This alone may be reason enough for many conventional investors not to touch digital assets. Their trust in a platform like HSBC will allow them to include crypto within their portfolios.The second aspect to that reluctance is rooted in a misunderstanding of digital assets, the risks involved, and how risk can be minimized. HSBC has clearly identified this by taking the initiative and launching its Virtual Asset Investor Education Center.Crypto ETF growth potentialThis development follows reports in mid-June that the Hong Kong Monetary Authority (HKMA) had exerted pressure on major banks to accept crypto exchanges as clients. The central bank and regulator specifically questioned HSBC and Standard Chartered about their reluctance to onboard crypto exchanges as clients.HSBC’s move to offer cryptocurrency services in Hong Kong reflects the growing acceptance and recognition of cryptocurrencies in the financial industry. By providing access to crypto ETFs, HSBC aims to cater to the increasing demand for digital assets among its customers in the region.The crypto ETF products that are currently on offer in Hong Kong are very recent. As an example, Samsung’s Bitcoin futures ETF was launched in January. The product has already seen a lot of interest due to growing uncertainty relative to the traditional global financial system.A report produced by the Hong Kong stock exchange in April found that crypto ETFs have the potential to play a significant part in unlocking the next phase of digital asset expansion in Asia. Clearly, HSBC have taken notice with this move to further enable that potential.