South Korea to begin confiscating cryptocurrency from cold wallets during tax investigations
Date: 2025-10-13 Author: Gabriel Deangelo Categories: IN WORLD
South Korea is beginning a new phase in its fight against cryptocurrency-related tax crimes. The National Tax Service (NTS) announced that it will now seize not only assets listed on exchanges but also cryptocurrency stored in cold wallets. This was made possible by the implementation of blockchain analytics tools that allow asset movements to be tracked and initiate searches if funds are suspected of being stored offline.
Over the past four years, the NTS has confiscated 146.1 billion Korean won (approximately $108 million) worth of cryptocurrency. These measures are a response to the rapid increase in the number of crypto investors: from approximately 12 million five years ago, by June 2025, their number exceeded 10.7 million. At the same time, daily trading volume increased from 1 trillion KRW to 6.4 trillion KRW, turning the crypto market into one of the country's most important investment sectors.
However, the growing popularity of digital currencies has led to an increase in violations. Tax debtors are increasingly using cryptocurrencies to conceal income. Until 2020, tokens and coins were not considered fully-fledged financial assets, but following legislative amendments, they came under the control of tax authorities. The first mass seizure of crypto assets from more than 5,700 defaulters took place in 2021, generating 71.2 billion KRW for the state.
The confiscation procedure is carried out as follows: the tax authority sends a request to crypto exchanges to determine whether the suspects hold accounts. Once ownership of the assets is confirmed, the accounts are frozen, and the cryptocurrency is sold on the market to pay off the debt. However, problems arise when using foreign platforms—South Korea has tax information exchange agreements with only 74 countries, not including the United States, China, and Russia. This significantly complicates cross-border collection.
Searching for assets stored in cold wallets—physical devices not connected to the internet—is particularly challenging. Such funds are virtually impossible to detect without physical access. To address this issue, NTS is implementing new analytical technologies capable of identifying suspicious transactions and detecting possible offline storage of cryptocurrency.
According to the agency's estimates, approximately KRW 78.9 trillion in digital assets will be transferred from local platforms to foreign accounts and personal wallets in 2025. Strengthening oversight of such transactions will be one of NTS's key objectives next year. To this end, it plans to expand international cooperation and modernize transaction monitoring systems to improve the effectiveness of cryptocurrency asset monitoring.
