South Korea Expands Crypto Seizures to Offline Hidden Assets

• South Korea targets hidden crypto assets as cold wallet tax evasion cases rise.
• NTS uses advanced tracking software to trace and seize concealed digital wealth nationwide.
• Overseas crypto transfers complicate enforcement as 78.9 trillion won leaves domestic exchanges.

South Korea Intensifies Crypto Tax Enforcement

South Korea tax The National Tax Service (NTS) is increasing its crackdown on cryptocurrency-related tax evasion. The agency announced that it will now be able to trace coins in cold wallets and said that concealing the digital possessions offline would not make them unseizable. NTS representatives assured that they are able to search households and seize hard drives in the case of detection of hidden crypto. The move is an indication of a more aggressive approach as digital possessions become more popular among the South Koreans.

According to the NTS, crypto investors have increased by 1.2 million 5 years ago to 10.77 million by June 2025. The volume of trading also increased with 1 trillion won increasing to 6.4 trillion won per day. With the attraction of more investors in the market, there are increased cases of tax evasion. In response to this, the agency has adopted superior cryptographic tracking technology to trace the trail of transactions and unearth assets.

As of 2021, the NTS has taken virtual property of more than 14,000 tax delinquents and recovered approximately 146.1 billion won (108 million). It seized 71.2 billion won in the hands of 5,741 people in its first big operation of the year. The National Tax Collection Act allows the NTS the power to demand account information of the local exchanges, freeze funds, and auction the confiscated crypto at market rate in order to recoup the taxes.

Cold Wallets and Overseas Transfers Raise Concerns

Cold wallets-physical storage (USBs and hard drives) assists the investor to save assets against hacking. But they also help to hide the riches easier. In cases whereby the records of transactions indicate that a taxpayer might be hiding coins offline, NTS analysts look into their history with tracking software. In case of any indication of concealing, the investigators go to the home of the suspect and take away the devices to retrieve the coins that were stored there.

Taxpayers are also transferring them to overseas exchange to avoid home scrutiny. Since the law of South Korea does not apply to foreign jurisdictions, the NTS has to depend on collaboration with 74 partner countries through the Multilateral Tax Administration Cooperation Agreement. But this is not the case with the United States, China, and Russia. It is estimated that approximately 78.9 trillion won of virtual assets will go off local exchanges to foreign accounts in early 2025 (according to the Financial Supervisory Service).

As the number of crypto users approaches 11 million, the NTS plans to make sure that all digital wealth is not out of reach of taxation, online or offline.