According to reports from local media in South Korea dated February 3, 2025, Gwacheon City has announced the implementation of IT solutions to seize and liquidate cryptocurrency assets belonging to tax evaders. The authorities have identified 361 citizens with high incomes who have failed to pay taxes on their cryptocurrency gains.
Officials believe these individuals are concealing their wealth in crypto assets to evade taxes. The average amount owed is reported to be 18.8 billion Won, accumulating to over 3 million Won in unpaid taxes.
Although the specifics of crypto taxes in South Korea are still being debated, the government has postponed the anticipated 20% crypto tax until 2027. However, various regions have empowered their tax agencies to confiscate crypto and other digital assets from those under scrutiny for tax evasion.
Officials have committed to warning individuals before taking any action to encourage voluntary tax payments. Failing to settle owed taxes by the deadline will lead to the seizure of their crypto assets.
🚨 Gwacheon City in South Korea is set to launch a crypto seizing system next month to target 361 high-income tax evaders! 💰 With over 18.8 billion won at stake, officials aim for fair taxation by seizing hidden crypto assets. Will this change the game for tax compliance? 🔍…
— quAInt (@crypto_quAInt) February 4, 2025
Kang Min-ah, the Tax Division Chief of Gwacheon City, stated, “We will realize fair taxation through strong responses to tax avoiders and actively block tax evasion through the seizure of virtual assets.”
In recent years, Gwacheon City has confiscated approximately 300 million Won in digital assets from high-net-worth individuals who have evaded local taxes, with 110 million Won seized in 2024 alone.
South Korea Is Looking To Amend the Foreign Exchange Transaction Act in 2025
Criminal activities related to digital assets and cryptocurrencies have been increasing in South Korea, prompting legislative efforts to amend regulations governing foreign exchange transactions in the first half of 2025.
According to the Korea Customs Service, crimes associated with virtual assets have accounted for 81.3% of the total reported 11 trillion KRW (USD 7.97 Billion) illegal foreign exchange activities.
The South Korean government is feeling the urgency to incorporate virtual asset regulations into its legal framework to prevent a potential surge in cryptocurrency-related crimes.
Delayed Crypto Tax Reforms Raise Investor Concerns
The proposal from the People’s Power Party to delay the enforcement of taxes on cryptocurrency trading profits has raised concerns among investors about potential impacts on market sentiment. With the crypto sector in South Korea showing significant growth, government data indicates a year-over-year increase in virtual asset market capitalization as of June 2024, amounting to 55.3 trillion Won with daily trading hitting 20 trillion Won.
Moreover, a recent withdrawal of a planned income tax that would affect individuals earning more than 50 million Won has fostered feelings of inequity among younger crypto investors.
