US lawmakers have introduced legislation to simplify cryptocurrency taxation, while South Korea faces growing criticism over its planned digital asset tax framework. The proposed ADAPT Act would establish different tax rules based on how people use cryptocurrencies. Meanwhile, South Korean industry experts argue that their country's existing framework overlooks several major blockchain activities.
Senator Steve Daines introduced the Adjusting Digital Asset Principles Tax Act on September 30. The US Senate detailed the proposal on October 7, outlining changes affecting investors, businesses, and tax authorities.
The legislation would apply traditional investment tax principles to comparable digital assets. It would also introduce separate treatment for transactions unique to blockchain networks, including stablecoin payments and transaction fees.
The ADAPT Act would exempt qualifying dollar-backed stablecoin payments from capital gains calculations when consumers purchase goods or services. Currently, US tax rules treat digital assets as property, requiring taxpayers to calculate gains or losses when spending them.
The proposal also addresses small blockchain transaction fees. Under the bill, users would avoid recognizing gains or losses on digital assets worth USD 10 or less when paying network fees.
Beyond payments, the legislation would update rules covering mining, staking, digital asset lending, and charitable donations. These changes would address activities that operate differently from conventional investment transactions.
At the same time, the bill would extend wash-sale restrictions to cryptocurrencies. Those rules generally prevent investors from claiming certain losses when they quickly repurchase substantially identical assets.
Furthermore, eligible digital asset brokers and dealers could choose mark-to-market taxation. This method would calculate gains and losses using year-end market values, even without actual asset sales.
According to a recent Bloomberg report, the proposed changes arrive as the United States implements Form 1099-DA reporting requirements. Brokers must report certain digital asset transactions beginning with 2025 activity, although initial reporting excludes cost-basis information.
Consequently, investors must still calculate their actual taxable gains and losses. Missing transaction records can make this process difficult, particularly when users trade across multiple platforms.
An August survey by Awaken Tax examined 1,000 US cryptocurrency investors. Among respondents who extended or planned to extend tax filing, 21% lacked necessary information from platforms.
Meanwhile, approximately one in five respondents expressed uncertainty about whether their Form 1099-DA accurately reflected their transaction history.
South Korea plans to begin cryptocurrency taxation in 2027 after developing its framework since 2020. However, industry representatives argue that current provisions fail to distinguish between different sources of digital asset income.
Under the planned rules, authorities would impose a 20% tax on qualifying annual gains above approximately USD 1,810. The framework classifies income from digital asset transfers and lending as miscellaneous income.
During an October 6 parliamentary audit, Deputy Prime Minister Lee Hyoung-il said authorities would gather views from lawmakers, industry representatives, and experts.
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Kim Min-seung, Digital X's research head, criticized the framework's limited treatment of losses and transactions. He noted that US rules already provide mechanisms for offsetting gains and losses.
South Korea also lacks comparable provisions for carrying certain investment losses forward, according to Kim. He argued that existing proposals largely focus on trading through domestic exchanges.
Similarly, Dongguk University professor Hwang Seok-jin called for separate tax treatment based on economic activity. He identified staking, mining, lending, airdrops, decentralized finance, and stablecoin payments as distinct activities.
Hwang also recommended establishing a Digital Asset Basic Act before introducing taxation. Such legislation would clarify asset classifications, business categories, and transaction types before authorities finalize tax obligations.
The ADAPT Act proposes more specific US cryptocurrency tax rules covering payments, network fees, investment activity, and reporting. Meanwhile, South Korea faces pressure to revise its planned 2027 framework. Industry experts continue calling for clearer asset classifications, fair loss treatment, and tax standards that reflect different blockchain activities.