From giving warnings to crypto exchanges to tracking down illegal activities, South Korea’s strict stance on crypto violators is an example for other countries. To create a fair and transparent environment, South Korean authorities are tightening their grip on tax evaders who hide wealth in cryptocurrency.
As per the local reports, the Gwanak district in Seoul has announced a new investigation targeting 325 individuals who owe a combined $714,000 in unpaid taxes. To track down hidden funds, officials will request data from the country’s five major crypto exchanges.
How Seoul is Cracking Down?
In recent years, South Korea has made it easier for local governments to seize and sell cryptocurrency belonging to tax evaders. A Supreme Court ruling in 2018 classified Bitcoin and other digital assets as property, making them eligible for confiscation. In 2022, new laws gave tax agencies the authority to directly seize and liquidate unpaid assets.
Gwanak’s initiative follows similar actions in other regions, including Gwacheon, showing that even smaller cities are joining the crackdown. If individuals fail to pay their taxes, authorities can freeze their wallets and eventually sell their holdings to recover the owed amounts. Since crypto tax policies are postponed till 2027, the local government has no other option than to seize the assets.
What Happens to Seized Crypto?
Once the government seizes cryptocurrency, taxpayers are given a chance to settle their debts. If they refuse or fail to respond, the assets are sold on the open market. The recovered funds go toward public finances, helping local governments cover various expenses.
Officials believe these measures will somehow discourage tax defaulters and ensure that digital assets are not misused as a way to hide wealth.
Crypto Tax Delay Sparks Mixed Reactions
In the meanwhile, South Korea’s People’s Power party proposed delaying crypto tax reforms, worrying investors. While some see it as a move to attract investment, others fear it may encourage crime. The crypto market in South Korea is booming, with a 27% YoY growth reaching 55.3 trillion won by June 2024, while daily trading hit 20 trillion won.
In contrast, the stock market has struggled, with margin deposits dropping 10 trillion won. The cancellation of a higher tax threshold has also frustrated young investors, adding to concerns about fairness in taxation.
