The global adoption of cryptocurrencies, including Bitcoin and Ether, has been on the rise. South Korea, in particular, has witnessed a significant surge in cryptocurrency ownership among its citizens. With the recent tweaking of tax policies, the country now requires individuals to declare their overseas assets, which has led to an astonishing revelation about the extent of cryptocurrency holdings among Koreans.

Crypto Assets Dominate South Koreans’ Overseas Accounts:
According to a report by South Korea’s National Tax Service (NTS) published on September 20, cryptocurrencies accounted for the most substantial proportion of taxpayers’ assets held overseas. Among the 5,419 individuals and organizations that declared their offshore financial accounts, a notable 1,432 entities declared their cryptocurrencies in their overseas holdings. This data reveals that South Koreans reported a staggering 130.8 trillion won ($98 billion) worth of crypto assets in their offshore accounts, constituting over 70% of the total reported overseas assets.

Types of Assets Declared:
While cryptocurrencies proved to be the most valuable offshore assets, it was the deposit and savings accounts that were most frequently reported. In total, 2,952 entities declared 22.9 trillion won ($17 billion) in these accounts. The collective reported overseas assets amounted to 186.4 trillion won ($140 billion), incorporating a variety of assets such as stocks valued at 23.4 trillion won ($17.6 billion).

Tax Authority’s Response:
In light of these findings, the National Tax Service has made it clear that it intends to investigate entities that fail to declare their overseas financial accounts. The NTS has collected cross-border information exchange data and foreign exchange information, enabling them to pursue penalties for those violating the rules. Governments worldwide are also taking steps to exchange information based on the Information Exchange Reporting Regulations, aiming to combat the risk of potential tax base erosion through virtual assets.

South Korea’s Regulatory Measures:
South Korea has been hailed as one of the crypto-friendly nations in Asia, with its authorities implementing robust oversight to regulate the digital assets landscape. In recent times, regulatory efforts have particularly focused on curbing illicit activities in the crypto markets and cracking down on tax evasion through crypto assets. The government has actively collaborated with exchanges to identify and penalize tax defaulters, leading to the seizure of millions of dollars’ worth of crypto assets. Additionally, plans to impose a 20% capital gains tax on digital assets have been deferred until the beginning of 2025.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.