Min Byung-deok, a lawmaker from South Korea’s Democratic Party, said virtual-asset investors should be allowed to carry losses forward for at least five years and deduct them from future gains before crypto taxes are imposed.

In a Facebook post on September 22, Min wrote that authorities should not tax gains while disregarding losses, criticizing the current tax framework for lacking a loss carryforward provision.

He gave the example of an investor who posts a 10 million won ($7,200) loss from virtual-asset investment in the first year and a 10 million won ($7,200) gain the following year. Over the two years, cumulative profit would be zero, but under the current system the investor would still owe 1.65 million won ($1,190) in taxes in the second year, he wrote.

Min said the U.S. and the U.K. apply capital gains and loss rules to virtual assets, allowing investment losses to be carried into future tax years and deducted from taxable income. South Korea should also introduce a loss carryforward of at least five years, he added. Domestic research has also found that major countries including the U.S. and the U.K. recognize carryforwards for crypto losses.

He also cited the lack of clear standards for calculating acquisition costs as a problem. Because the relevant standards have been left to a presidential decree, an unclear system could leave investors paying more tax than they actually owe or bearing responsibility for filing errors, Min wrote.

Min said he supports taxing virtual assets in principle, but only after the necessary tax infrastructure is in place. He said he agrees with the principle that income should be taxed, but argued that the foundation for collecting taxes fairly must come first.

He also pointed to the Crypto-Asset Reporting Framework, or CARF, under which the first exchange of data between countries is scheduled for 2027. If taxation begins before overseas trading data is sufficiently secured, the tax burden could fall disproportionately on users of domestic exchanges, he said.

That, in turn, could push trading overseas and reduce revenue for South Korea’s virtual-asset businesses as well as related tax receipts.

Min also said the government should disclose in advance the expected tax revenue impact and the administrative costs of crypto taxation. He said South Korea should, like the U.K., present projected tax revenue, administrative costs and the reporting burden on investors for each implementation date.

He proposed pushing back the start of crypto taxation until after passage of the Digital Asset Basic Act, a bill he introduced. Under that approach, the legal status of staking, lending, airdrops and hard forks, along with investor protection measures and business responsibilities, would be established first, with taxation introduced once overseas transaction data is actually available. Public legislative materials also show that Min sponsored the framework bill aimed at institutionalizing the broader digital-asset sector.

“This is not about avoiding taxes. It is about collecting them properly,” Min wrote. He added that authorities should strengthen enforcement against unfair trading and bolster investor protection during the preparation period for taxation.