Overseas crypto futures trading to remain untaxed under South Korea’s new tax regime

South Korea’s cryptocurrency tax, set to take effect on Jan. 1, will not apply to profits from crypto futures and options trading on overseas exchanges under current law, KBS reported. Under the existing Income Tax Act, taxable income covers gains from transferring or lending virtual assets, meaning profits from spot crypto trading or lending on domestic and overseas exchanges are subject to tax. By contrast, futures and options are derivatives contracts whose returns are tied to price movements rather than direct transfers of the underlying crypto asset. KBS said that under the principle that taxes can be imposed only on income explicitly defined by law, those products cannot be taxed under the current rules. The Ministry of Economy and Finance said taxation is difficult because South Korea’s Financial Services Commission does not recognize crypto derivatives as financial instruments, while the Financial Services Commission said decisions on taxable items fall under the ministry’s authority. As crypto derivatives trading is banned in South Korea, the report said the gap also raises concerns over tax fairness between domestic users and traders using overseas exchanges.