South Korea Intensifies Crackdown on Crypto Assets Held in Cold Wallets

South Korea’s National Tax Service (NTS) is stepping up its efforts to handle tax evasion related to cryptocurrencies, explicitly stating that crypto assets maintained in cold wallets are not exempt from seizure.

According to a report by the local news source Hankook Ilbo, an NTS representative announced plans to conduct home searches and confiscate devices such as hard drives and cold wallets if there are suspicions of tax evasion related to offline storage of cryptocurrencies.

“We analyze tax delinquents’ coin transaction history through crypto-tracking programs, and if there is suspicion of offline concealment, we will conduct home searches and seizures,” the spokesperson stated.

The NTS has authority under South Korea’s National Tax Collection Act to request information from local exchanges, freeze accounts of tax delinquents, and liquidate assets at market value to recover unpaid taxes.

Over $100 Million in Crypto Seized in Four Years

A cold wallet is a method for storing cryptocurrencies offline, which prevents unauthorized remote access. While it enhances security, the NTS warns it can enable tax evasion. This latest announcement reflects an evolution in the agency’s approach, spurred by the increasing mainstream adoption of cryptocurrencies in South Korea.

Hankook Ilbo noted that the number of cryptocurrency investors in South Korea reached nearly 11 million in June, a staggering rise of almost 800% since 2020 when the figure stood at 1.2 million.

Furthermore, trading volume surged from 1 trillion won ($730 million) to $4.7 billion in the same time frame. This growth in cryptocurrency use has corresponded with a spike in cases of tax evasion related to crypto assets. Since launching their focus on crypto evasion in 2021, the NTS has confiscated approximately $50 million from 5,700 individuals.

In total, over the last four years, the NTS has seized and liquidated approximately $108 million in cryptocurrency from more than 14,000 taxpayers.

Rise in Suspicious Crypto Transactions in 2025

The NTS’s scrutiny on cold wallets occurs amidst a reported rise in suspicious cryptocurrency transactions in 2025. As of August 2025, the country’s Financial Intelligence Unit (FIU) disclosed that virtual asset service providers (VASPs) submitted nearly 37,000 suspicious transaction reports (STRs). This number surpasses the combined totals from 2023 and 2024, indicating a new record high for suspicious activity.