South Korea to tax airdrops in 2025

The South Korean Ministry of Economy and Finance plans to levy a 50% tax on all airdrops.

Airdrops are incentives used by cryptocurrency companies that seek to popularize a certain blockchain or product.

Essentially, airdrops are calculated based on consumers’ current ownership stake in a blockchain or a product in the cryptocurrency space.

The more a consumer has, the bigger airdrops they can expect. Because of airdrops, many consumers prefer to stick with a certain cryptocurrency solution and see it as a long-term investment, which enables developers to attract new consumers and grow their projects.

While airdrops were appealing, especially because they are often not taxed, this is not set to change.

South Korea, which seeks to regulate digital assets closely, is looking to introduce a new tax on cryptocurrencies start 2025.

However, the airdrop tax is likely to kick in much sooner. South Korea confirmed that anything above $1,860 in cryptocurrency gains would be considered taxable income.

South Korea is one of the first movers in terms of determining how cryptocurrencies will be taxed. Inherent challenges exist due to the volatile nature of these assets which are prone to change their value rapidly.

The income will be taxed at a rate of 20%. While this should have already happened, the country decided to wait a little while longer before rolling out the new law.

In the meantime, you can still enjoy recreational use of cryptocurrencies at websites such as 1xBit, Bitcasino and FortuneJack.

Source

Updated: 08/23/2022 — 10:00