As the use of crypto assets increases, different jurisdictions create laws to govern their practices and controls. Some rules are related to various aspects, and regulations and taxation play important roles.
In a global analysis, cryptocurrency taxation is on the high side. This is because most governments want to harvest from the trades and transfers that characterize various transactions with virtual assets.
In a recent development, South Korea’s Ministry of Strategy and Finance is introducing a new taxation gift in cryptocurrency airdrops. Authorities tax third parties who receive cryptocurrency transfers for free.
According to a Ministry of Finance spokesperson, free transfers of virtual assets are classified as gifts. Classification is made under the Inheritance and Gift Tax Law.
South Korea’s Ministry of Finance announced its plans on August 22. This was during his response to a tax law interpretation for a freely portable digital asset. There is a request to determine whether authorities will enforce the gift taxation law.
Airdrops are very famous for the functioning of cryptocurrency protocols. It offers digital asset holders the opportunity to receive rewards from a protocol in the form of native crypto tokens. Airdrops usually occur when an existing blockchain is hard forked for the function of a new blockchain.
It can also happen when investing crypto assets on a blockchain network. A gift tax also applies to crypto staking, where customers receive rewards as digital assets.
A report from a South Korean local news outlet stated that 2025 is an important time for taxes on digital asset capital gains to begin. But gifting virtual assets will still fall under current jurisdiction.
South Korean gift tax law applies to all items of economic value that can be converted into fiat currency. The authorities have determined the gift tax to be between 10% and 50% of the total value of the gifts received. Users who are liable to pay gift tax are expected to apply for gift tax within three months of receiving gifts.
The tax arm stated that the issue of taxation is the main value for any gift of a digital asset. It revealed that only the strengthening of additional legislation could allow airdrops to be exempted from gift tax.
This current situation may be unacceptable to many crypto enthusiasts in South Korea. While the government is trying to increase its revenue source, the digital currency community will consider it a loss for its gains. However, this is also one reason why many people frown on regulation.
