South Korea's National Tax Service (NTS) is tightening its crackdown on cryptocurrency tax evasion. According to The Korea Daily, the agency announced that cold wallets will also be subject to search and seizure.
The tax agency stated that it uses blockchain analysis tools to track on-chain transactions and will seize hard drives or cold wallets if it suspects crypto assets are being stored offline. Over the past four years, the agency has seized and liquidated crypto assets totaling ₩146.1 billion (approximately $108 million) from 14,140 taxpayers.
Tax evasion cases are reportedly increasing with the proliferation of cryptocurrencies. The anonymous nature of virtual assets makes identifying their owners much more difficult than other financial assets like deposits or stocks. Therefore, NTS plans to deploy specialized tracking software to prevent attempts to hide assets.
According to official data, the number of virtual asset investors in South Korea has increased nearly tenfold in the last five years, from 1.2 million to 10.77 million. Average daily trading volume has reached approximately $4.5 billion, demonstrating that cryptocurrencies have become a popular investment tool.
The use of crypto assets in tax collection began in 2021. That year, the NTS seized the crypto assets of 5,741 high-income tax debtors, collecting a total of approximately $50 million. The process begins with the tax office inquiring about the tax debtor's accounts on exchanges. If crypto accounts belonging to the tax debtor are identified, the exchange freezes the account, and the NTS seizes the assets and sells them at market price to collect the debt.
However, some debtors choose to evade oversight by moving their assets to offshore exchanges. South Korea shares information with 74 countries under a multilateral tax cooperation agreement, but the US, China, and Russia remain outside this agreement. According to the Financial Supervisory Service, the amount of crypto transferred from domestic exchanges to offshore platforms or individual wallets reached approximately $55 billion in the first half of 2025.
Tax evaders store their assets in “cold wallets,” further complicating audits. Cold wallets are hard drives or hardware wallets that are not connected to the internet. Cryptocurrency stored in these devices, like cash or gold, is extremely difficult to identify.
*This is not investment advice.
