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South Korea Builds AI Crypto Tax System Before 2027 Launch

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Brian Armstrong's Bold Prediction: AI Agents Will Soon Dominate Global Financial

TLDR

  • South Korea has allocated 3 billion won to build an AI-powered system to track cryptocurrency gains before 2027.
  • The National Tax Service will use machine learning to detect unusual crypto transactions and possible tax evasion.
  • South Korea will impose a 22% tax on virtual asset income above 2.5 million won starting January 1, 2027.
  • The tracking system will share data with the Korea Customs Service and the Bank of Korea.
  • Coinbase has denied claims that it lobbied for a stablecoin-only tax exemption in the United States.

South Korea has committed 3 billion won to build an AI-based crypto tracking system before new taxes begin in 2027. The National Tax Service will deploy the platform to monitor virtual asset gains and enforce a 22% tax rate. At the same time, U.S. lawmakers face pressure as Coinbase denies claims that it seeks stablecoin-only tax exemptions.

South Korea Moves to Enforce Crypto Tax Rules

South Korea’s National Tax Service has launched a public bidding process for an integrated crypto tracking system. The agency listed the project on the Public Procurement Service platform with a value of 3 billion won, or about $2.02 million. The NTS plans to select a contractor within this month and start system design in April.

The agency will use artificial intelligence and machine learning to detect unusual transaction patterns. Officials will share findings with the Korea Customs Service, the Bank of Korea, and the Ministry of Data and Statistics. The NTS aims to begin pilot testing in November and complete the full launch by December 2026.

South Korea will start taxing virtual asset profits on Jan. 1, 2027. Income exceeding 2.5 million won will face a 22% tax rate, which includes 20% national tax and 2% local tax. Authorities said the system will ensure that taxpayers report accurate gains under the new framework.

The NTS stated that the platform will analyze large datasets from exchanges and wallets. The system will flag transactions that suggest concealment or tax evasion. Officials said the program will strengthen oversight before enforcement begins in 2027.

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Coinbase Faces Claims Over Stablecoin Tax Exemption Push

U.S. lawmakers continue to debate de minimis exemptions for small crypto payments. Companies such as Block have urged Congress to treat Bitcoin like foreign currency for minor transactions. However, reports claim Coinbase has told lawmakers that “no one is using Bitcoin as money.”

Sources allege that Coinbase supports a tax exemption limited to stablecoins. A stablecoin-only rule would exempt tokens like USDC from capital gains taxes on small purchases. Coinbase holds a financial interest in USDC, which has raised concerns among industry advocates.

Faryar Shirzad, Coinbase’s Chief Policy Officer, rejected the accusations. He said the claims are “a total lie” and stated that Coinbase has never lobbied against Bitcoin. Shirzad added that the company will not support measures that undermine Bitcoin adoption.

Representatives from Block said Congress now leans toward limiting exemptions to stablecoins. Adam Back, CEO of Blockstream, said stablecoins rarely generate taxable gains for retail users. He argued that policymakers should exempt Bitcoin from capital gains if they want it to function as a digital currency.

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Crypto World

Democrats Promise to Oversee Reported DOJ Probe Into Binance

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Democrats Promise to Oversee Reported DOJ Probe Into Binance

A group of Democratic senators say they will oversee a reported Justice Department investigation into possible Iran-related sanctions violations on the crypto exchange Binance.

Senators Chris Van Hollen, Elizabeth Warren and Ruben Gallego said in a joint statement on Thursday that they “will conduct oversight to ensure the Department of Justice conducts a serious investigation into Binance and holds the company accountable for any wrongdoing.”

The Wall Street Journal reported on Wednesday, citing people familiar with the matter, that the Justice Department was investigating Iran’s possible use of Binance to evade sanctions.

“Binance has an established track record of putting profits ahead of the law,” the senators said, adding that the report raised “serious concerns that the firm is again violating US sanctions laws, recklessly helping bankroll the activities of terrorist groups connected to Iran.”

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Binance did not immediately respond to a request for comment, but a company spokesperson previously told Cointelegraph it was “not aware of any investigations. But as always, we are collaborating with regulators and law enforcement to investigate the facts.

The senators said that last month, they asked US Treasury Secretary Scott Bessent and US Attorney General Pam Bondi to investigate Binance over concerns about the movement of Iran-linked funds.

Binance filed defamation suit against WSJ

Binance sued the Wall Street Journal on Wednesday, claiming a report it published on Feb. 23 was defamatory.

The report said that Binance fired staff who flagged $1 billion worth of crypto tied to sanctioned Iranian entities, including Yemen’s Houthis and the Islamic Revolutionary Guard Corps.

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Binance denied that it had stopped any investigation and said the Wall Street Journal’s report was false. 

Related: Binance claims ‘full and complete legal victory‘ in Alabama court

Binance had pleaded guilty in November 2023 to violating US anti-money-laundering and sanctions laws, paying a record $4.3 billion fine and agreeing to operate under US oversight.