South Korean investors and companies have accumulated an impressive $97.9 billion worth of cryptocurrencies in overseas accounts, according to a recent announcement by South Korea’s National Tax Service. This staggering figure represents approximately 70% of the total reported foreign financial assets held by South Koreans.
Between January and June this year, the National Tax Service reviewed monthly tax filings and found that 1,432 retail investors and companies collectively hold nearly $100 billion in crypto assets overseas. Notably, this is the first annual assessment to include cryptocurrencies.
To ensure compliance, South Korean residents and companies with over $372,939 in overseas assets must report them to tax authorities. The inclusion of cryptocurrencies in the assessment reinforces the need to accurately report crypto holdings.
The report reveals a substantial 191.3% increase in overseas financial assets, with 5,419 retail investors and companies reporting a total of $139 billion. The National Tax Service attributed this surge mainly to the first-time inclusion of foreign virtual asset accounts.
In its press release, the National Tax Service outlined a strategy to combat non-compliance. Authorities will use cross-border transaction data to identify individuals attempting to evade reporting overseas asset holdings, with strict penalties including criminal charges for those found guilty of non-disclosure.
Against this backdrop, South Korea banned foreign cryptocurrency exchanges from operating in the country in 2021. However, South Korean residents can still trade cryptocurrencies through overseas exchanges.
The National Tax Service’s efforts to enforce transparency and accountability of overseas crypto holdings demonstrate South Korea’s commitment to regulating and tracking the expanding crypto market, ensuring fair taxation, and discouraging illicit activities.
