Different Goals, Different Approaches: South Korea and Russia on Crypto Taxation

South Korea: A Focus on Growth and Public Support

South Korea has postponed its crypto taxation laws to 2027. The initial tax framework looked to levy 20% on annual crypto trading profits exceeding 2.5 million Korean won (approximately $1,800). The taxation was first scheduled to be implemented in 2021 but was postponed several times to support investors (and appease electors.)

Apart from supporting investment activity, the decision also protects younger generations who increasingly rely on crypto to overcome economic challenges, especially with volatile coins that can bring major gains. 

This delay aligns with a broader national strategy to stimulate innovation in blockchain and DeFi. Despite several legal challenges, the local tech-savvy society has welcomed blockchain, with users on registered local crypto exchanges accounting for around 12.5% of the population. The local blockchain ecosystem includes companies working in all major fields. In addition, the country is working on its CBDC project.

At the same time, the country is extremely careful in crafting legislation and takes a cautious approach to the crypto industry. Earlier this year, South Korea began enforcing the Protection of Users of Virtual Assets Act, designed to safeguard users from unfair trading practices and market manipulation. Stringent control over centralized exchanges ensures financial transparency and user security. Platforms such as Upbit and Bithumb are required to comply with rigorous AML protocols and other guidelines. The existing regulations mainly prevent international players from entering the market.

The government continues working on the regulatory framework step by step. For example, it plans to regulate cross-border transactions of virtual assets starting in 2025. 

This measured approach aims to position crypto as a democratic financial tool and support further industry development under strict supervision, albeit at the cost of immediate tax revenue. Some experts believe that the delay might also push crypto institutionalization in the country.

Russia: A Pragmatic, Short-Term Approach

In contrast, Russia recently introduced a law taxing crypto miners and traders starting January 1, 2025. Crypto assets will be treated as property. Personal income from trading will be taxed at a rate of 13-15%, and the income from mining will be taxed on income tax at a standard rate (from 2025 - 25%). Operations related to mining are exempted from VAT. For tax control purposes, Russia’s mining infrastructure operators must report relevant information about their users to local authorities.

In this way, the government views crypto as a means to bypass international sanctions and fill budget gaps amidst economic challenges. Russia is rapidly enforcing new crypto laws that favor mining and cross-border payments with crypto. The laws enacted this Summer made mining and related activities a regulated and thus taxable commercial activity. The new law is a logical extension of the government’s ongoing efforts.

As the government expects power shortages, it also plans to ban mining in some regions instead of building extra infrastructure to support industry development. This also shows that the country is looking for immediate gains instead of supporting the mining business, in which Russia has the potential to compete with the U.S. and other world mining leaders. 

However, this urgency comes at the expense of comprehensive regulatory frameworks, leaving risks of market instability and long-term inefficiencies. Russia’s approach emphasizes quick fiscal gains over fostering a robust crypto ecosystem, potentially limiting innovation and market growth.