Cryptocurrency regulation is evolving quickly worldwide and South Korea is taking a significant step forward. The government has announced plans to build an AI-powered tracking system designed to monitor cryptocurrency profits and support the enforcement of upcoming digital asset tax laws.
The system will help authorities analyze transaction data and identify potential tax liabilities.
At the same time, the United States is facing ongoing debates about crypto taxation policies. Coinbase has recently drawn criticism after reports suggested the exchange may be advocating for tax exemptions that favor stablecoins rather than Bitcoin.
These developments highlight the growing global discussion around how cryptocurrencies should be regulated and taxed as digital assets become more widely adopted.
South Korea Plans AI System to Monitor Crypto Gains
South Korea’s National Tax Service (NTS) has begun developing an advanced system to track cryptocurrency profits as part of the country’s upcoming digital asset tax regulations.
The government has allocated 3 billion won (about $2 million) to build the platform, which will help authorities detect taxable crypto income and improve transparency in the market.
The NTS has opened a bidding process through the Public Procurement Service, the government body responsible for managing public contracts and purchases.
Once a developer is selected, the design and development phase is expected to begin in April. Officials aim to test the system later this year and launch it before South Korea begins enforcing its new cryptocurrency tax rules scheduled for January 2027.
Related: South Korea Approves Tokenized Securities in Digital Assets
Timeline for South Korea’s Crypto Tracking System
The development of the tracking system will follow a structured timeline.
- March: Government selects the winning contractor
- April: System design and development begin
- November: Pilot testing of the platform
- December: Full system launch
This schedule ensures that the system will be operational before crypto taxation begins on January 1, 2027.
How the AI System Will Track Cryptocurrency Transactions
South Korea’s new crypto monitoring system will use artificial intelligence (AI) and machine learning to track cryptocurrency transactions more effectively. These advanced technologies can study large amounts of blockchain data and detect patterns that may look unusual or suspicious.
For example, the system may identify hidden crypto profits, irregular transfers between wallets, or activities that could suggest tax evasion. By analyzing this information automatically, the government can better understand how people are earning and moving digital assets.
The platform will also share important data with several government agencies, including the Korea Customs Service, the Bank of Korea and the Ministry of Data and Statistics. Working together, these organizations will be able to monitor the crypto market more closely.
The main goal of this coordinated system is to increase transparency in the digital asset ecosystem while ensuring that individuals properly report and pay taxes on their cryptocurrency gains.
South Korea’s Upcoming Crypto Tax Rules
South Korea is preparing to introduce new cryptocurrency tax rules in the coming years. Under the proposed law, people will need to pay tax on their crypto profits if their total gains exceed 2.5 million won, which is roughly $1,700 to $1,800 per year.
If an investor earns more than this limit, the profit will be taxed at a total rate of 22%. This tax includes 20% national income tax and an additional 2% local income tax.
The South Korean government believes these rules will create a more transparent system for digital assets. By tracking crypto gains more effectively, authorities hope to ensure that investors report their profits correctly and pay the required taxes.
Coinbase Faces Criticism Over Crypto Tax Exemption Debate
While South Korea is strengthening its crypto regulations, the United States is still discussing how cryptocurrency should be taxed.
Some companies, including Block, the fintech company founded by Jack Dorsey, want a tax exemption for small crypto payments. This would allow people to use Bitcoin for small purchases without paying capital gains tax on every transaction.
However, some reports claim that Coinbase supports tax exemptions mainly for stablecoins instead of Bitcoin. Critics believe this could benefit stablecoins like USDC, which is connected to Coinbase. The company has denied these claims and says it supports fair rules for the entire crypto industry.
Allegations and Coinbase’s Response
Some reports claim that Coinbase told U.S. lawmakers that Bitcoin is not widely used for everyday payments. Because of this, critics say the company may be supporting a tax exemption that applies only to stablecoins instead of Bitcoin.
Opponents argue that this could benefit USDC, a stablecoin connected to Coinbase’s business interests. However, Faryar Shirzad, Coinbase’s Chief Policy Officer, strongly rejected these accusations. He said the claims are not true and insisted that Coinbase has never tried to lobby against Bitcoin.
Even with this denial, some industry experts believe lawmakers in the United States may still consider tax exemptions limited to stablecoins for small crypto transactions.
More: South Korea Busts $102M Crypto Money Laundering Network
Industry Experts Weigh In
Several cryptocurrency experts have also shared their opinions on the ongoing tax debate. Adam Back, the CEO of Blockstream, said that stablecoins usually do not create large profits for everyday users.
Because their value is tied to traditional currencies like the U.S. dollar, price changes are very small. For this reason, he believes giving tax exemptions only to stablecoins may not solve the real issue.
Back suggests that if Bitcoin is expected to work as a global digital currency for daily payments, governments should consider removing capital gains taxes on small Bitcoin transactions to make it easier for people to use it in everyday purchases.
